Estate & Gift Planning Awareness Month: Long-Term Care Considerations

Estate planning is about more than ensuring your clients’ assets are distributed according to their wishes. It’s about ensuring their loved ones are financially secure and well cared for. One of the most significant yet often overlooked components of a solid estate plan is long-term care (LTC) planning. With LTC costs rising and aging populations growing, factoring LTC into an estate plan has become increasingly essential.

October is Estate & Gift Planning Awareness Month, and we’re proud to partner again with The Financial Awareness Foundation to promote this simple and powerful message: there’s no better time than “now” to discuss estate plans and long-term care with your clients.

In the United States, approximately 67% of adults die without a valid will. Studies also show that more than 70% of seniors will require some form of LTC during their lifetime. Intestate estates and unaccounted-for LTC expenses can leave family members facing financial and emotional challenges during an already difficult time.

The Intersection of Estate Planning & LTC

At its core, estate planning ensures that your client’s wishes are carried out and their assets are protected after death. However, when planning for LTC, the focus shifts to protecting those assets while they’re still alive.

The two types of planning are inextricably linked—without careful consideration of LTC costs, an estate that once seemed secure may shrink dramatically, leaving little for your client’s heirs.

While Medicare may cover short-term stays in skilled nursing facilities, it does not cover long-term custodial care, including assistance with daily living activities such as bathing, dressing, and eating. This gap in coverage means that families often have to fund LTC out-of-pocket or rely on Medicaid, which has strict eligibility requirements and limited options.

Estate Shrinkage Due to LTC Costs

The rising costs of LTC can be staggering. In some states, the average monthly cost of a private room in a nursing home exceeds $10,000. Even assisted living facilities, which provide a lower level of care, can cost upwards of $5,000 per month. Without proper planning, these expenses can quickly erode an estate’s value.

Trust and estate professionals like yourself should recommend incorporating LTC insurance, trusts, and other financial tools into your clients’ estate plans to mitigate this risk. However, there is no one-size-fits-all solution, and the right approach for your client will depend on factors like estate size, health, and family-specific needs.

Bridging LTC & Estate Planning

LTC Insurance

LTC insurance covers the costs of care that traditional health insurance does not. Purchasing a policy while your client is healthy can help protect their assets later in life. Some policies even allow for hybrid options that combine LTC coverage with life insurance, providing flexibility and peace of mind.

Health Savings Accounts (HSAs)

An HSA can be a powerful savings vehicle for LTC expenses if your client has a high-deductible health insurance plan. When one contributes pretax dollars to the account, they can be withdrawn later on tax-free for qualified medical expenses, including LTC costs. HSAs also allow unused funds to roll over year after year, making them an excellent way to build savings for future healthcare needs.

Trusts

Trusts can be an effective tool for protecting assets and managing LTC costs. A Revocable Living Trust allows your client to transfer their assets to the trust while maintaining control during their lifetime. If long-term care is needed, the Trust can help ensure that assets are managed according to your client’s wishes. Irrevocable Trusts are also an option. These Trusts protect assets from being counted for Medicaid eligibility while still providing for care.

Medicaid Planning

Medicaid is a government program that can help cover LTC costs for those with limited assets. However, qualifying for Medicaid often requires careful planning to avoid penalties or delays in coverage. Strategies like Medicaid-compliant trusts and careful gifting can help protect your client’s assets while ensuring they receive the care they need.

The Significance of Planning Ahead

Our longstanding partnership with the Financial Awareness Foundation reinforces the shared commitment to enhancing financial awareness and literacy. Estate planning doesn’t exist in a silo—its impacts are far-reaching, touching various aspects of your client’s financial planning needs.

By initiating estate and end-of-life planning conversations early and often, you can educate your clients on the significance of comprehensive estate and gift planning.

This Estate & Gift Planning Awareness Month, let’s commit to leaving nothing on the table. When informing clients on the significance of thorough estate planning, including LTC plans, we protect them and their families during some of their most vulnerable moments.

For estate professionals who need to establish heirship, HeirSearch offers unparalleled service and commitment, with a 97% success rate.

Contact us to learn more about our process and how we can support your needs.

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