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How nursing home care could consume your entire legacy

On Behalf of | Jul 15, 2021 | Estate Planning |

As you plan for your golden years, you probably envision yourself living independently, traveling or spending a lot of time with your favorite family members. While an optimistic outlook in life is beneficial, it may not be very helpful for you during estate planning.

A good estate plan looks not just that what happens when you die and the legacy you leave behind for others but also at your needs. What if you have an accident or develop a severe medical condition that leaves you incapacitated?

You may need more support than you expect as you get older. The longer you live, the more likely it is that you will eventually require round-the-clock support. If you don’t think now about covering the cost of nursing home care, you may find yourself dealing with financial hardship in your golden years and unable to leave a meaningful legacy for the people that you love.

Nursing homes care can cost more than your annual salary

Nursing homes charge a premium price for the support that they provide older adults and disabled individuals. The costs are so high that a few years of nursing home care might be enough to consume all of the assets you have set aside for your family, including the equity accrued in your home.

A private room in a nursing home costs $102,200 each year on average. A shared or semi-private room will still lead to big expenses, as it averages $90,156 a year. Trying to pay out-of-pocket may be impossible, which means you needed to qualify for Medicaid.

However, you will have to spend everything you own first unless you plan to qualify for Medicaid years ahead of time. Even if you get Medicaid benefits, if you don’t plan to preserve your assets, Medicaid recovery will likely come after all of the property in your estate, including the home that didn’t count against you when you initially applied for benefits.

It is better to have a plan you don’t need than to need help and have no plan

About 70% of those who are 65 right now will need long-term care. A smaller fraction, 20%, will need intensive care for five years or more. The costs for that care could consume a lifetime of savings and still leave someone with debt.

In other words, even if you are healthy now, nursing home costs could still be a concern later in your life. Your family may not be able to offer you the kind of support you would need to continue living independently. Making sure that you can cover nursing home expenses and protect your assets can be a very important stop for older adults thinking about state benefit programs and their legacy.

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