Planning for Long-Term Care and Nursing Home Essentials
Planning to protect assets is just one part of preparing for long-term care, whether care takes place in a nursing facility or at home. The costs of long-term care are staggering. However, there are established strategies to protect a lifetime of earnings while remaining eligible for care through Medicaid and other long-term care benefits.
Proper planning can help preserve assets for a spouse and family members while ensuring that appropriate care can be received. The family should not be forced to bear financial responsibility for costs when planning opportunities are available.
What Type of Trust is Needed?
A Medicaid Asset Protection Trust (MAPT) is often the first step in protecting the family home and other significant assets. Unlike a revocable trust, the MAPT is an irrevocable trust, and assets placed in the trust are generally not considered countable for Medicaid purposes after the applicable look-back period has expired.
Once assets are in the trust, ownership and control are relinquished, thereby creating the protection. Medicaid and the IRS typically treat assets in a revocable trust as though they are still owned by the individual and therefore are not exempt assets.
Which Documents are Necessary for Long-Term Care Planning?
Once a person requires long-term care, it is usually because their health is failing. Giving a family member or reliable friend the authority to make decisions streamlines medical and financial decision-making if the person becomes unable to communicate their wishes.
Several documents are needed in advance: a Power of Attorney for financial matters, a Health Care Power of Attorney (sometimes known as a Healthcare Proxy), a Living Will to express wishes regarding end-of-life care and treatments and a Last Will and Testament for property distribution.
Other documents may be appropriate depending upon the individual’s wishes and medical status. A DNR – Do Not Resuscitate – should be in place if the person does not wish to have CPR performed in case of a heart attack. In some states, a MOLST – Medical Orders for Life-Sustaining Treatment – is used to document a patient’s treatment preferences for life-sustaining treatment.
Do You Have Long-Term Care Insurance?
Medicare does not pay for extended stays in a nursing home, which is why it’s so important to plan for the possibility of needing Medicaid assistance for long-term care. Long-Term Care (LTC) insurance policies are expensive, and the ability to purchase coverage decreases with age. Most people must purchase a hybrid policy, a long-term care insurance policy with a life insurance policy.
Estate and Long-Term Care Planning Go Hand in Hand
Planning can protect assets. However, it must be completed well before long-term care becomes necessary. Waiting until a medical crisis occurs limits the available options and protections available to the spouse, the family and the individual. Thoughtful advance planning can make a difficult situation more manageable and help avoid preventable financial, legal and emotional complications.
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