Our Irrevocable Trusts Compliment Long-Term Care Insurance

Long-term health is the single largest threat to a family’s financial future, but Long-Term Care Insurance (LTCI) is expensive.  For that reason, most people simply choose to roll the dice and go the private insurance route.

With the average cost of long-term care pushing $150,000 annually in Connecticut, most people “burn down” everything they own extremely quickly before qualifying for Medicaid. This may even include the loss of their home. The damage is emotional, as well as financial, as their childrens’ inheritance vaporizes in the last years of their life.  

The solution—a plan that combines LTCI with an Irrevocable Trust highlights the positives of each solution, while drastically smoothing over the negatives…

Long-Term Care Insurance for 5 Years

The pushback regarding LTCI is legitimate—ever-increasing (and variable) premium rates that typically must be paid forever for the policy to be effective. This causes inaction. 

With this solution, a strong LTCI policy only has to be funded for 5 years! Why? It only needs to exist long enough to provide coverage during the dreaded 5-year Medicaid “lookback” period.  After 5 years, the policy can lapse or be replaced by something more cost effective. 

Irrevocable Trust

At the same time, an Irrevocable Trust should be established naming someone other than the individual or their spouse as Trustee to hold and manage their assets.

Wiley Etter Doyon, LLC charges a one-time “flat fee” for establishing the Trust, which dwarfs the blank check worth of premiums that would be paid to the insurance company perpetually.

Assets transferred to this Trust become fully shielded from Medicaid’s mandatory spend downs after the “lookback” period expires, which allows the client to drop their LTCI policy.

These Trusts also provide the following: 1) Asset Protection for Trust beneficiaries (i.e., protections against divorce, lawsuits, creditors and bankruptcy); and 2) Probate Avoidance.

*Disclaimer: viability and implementation of this plan requires consultation with an attorney.