Do Nothing vs. Long Term Care Insurance vs. Gifts vs. Irrevocable Trust–Part 1

May 4, 2015

This edition of the Koldin Report E-Newsletter begins a series comparing the pros and cons of (1) Doing Nothing (2) Purchasing Long Term Care Insurance (3) making gifts to your children, and (4) transferring your savings and family home to an Irrevocable Family Trust (also sometimes referred to as Irrevocable Medicaid Trust). If you need long term care in a Nursing Home or at Home, which in Upstate New York costs around $10,000 per month, there are 3 ways to pay for it:(1) Pay for your care with your life savings(2) Pay for your care with Long Term Care Insurance(3) Pay for your care with Medicaid In planning for how you are going to pay for Nursing Home or Home Care if you someday need these services, you have 4 basic choices:(1) Do Nothing(2) Purchase Long Term Care Insurance(3) Make Gifts to your Children(4) Transfer to an Irrevocable Trust In this first newsletter of this series, we review the consequences of doing no planning to protect your life savings in the event you need long term care at home or in a Nursing Home.

Do Nothing Most people procrastinate and do nothing even if it was not their ultimate plan. Doing nothing means that you are choosing to pay for your long term care needs with your life savings at a rate of around $10,000 per month until you run out of money. Once you run out of savings and you have cashed in and spent your investments, you will eventually be poor enough to qualify for Medicaid to pay for the cost of your care. This means that your children will lose most of their inheritance and your spouse will have to survive on a much lower standard of living. As we have discussed in other newsletters, all of which can be found on our website by clicking here, and in the Medicaid section of our website at by clicking here, even if you are already in a Nursing Home, there may still be options to protect some or all of your life savings. So, you should not assume it is too late. However, your best chance of saving most of your assets is by choosing one of the other 3 planning options rather than doing nothing. If you decide to do nothing, then at a bare minimum, you should sign the basic legal documents which are a Power of Attorney, Health Care Proxy, and Last Will and Testament.

A Power of Attorney that contains a signed comprehensive gift rider will provide your family with the tools they need to try to protect some of your life savings. Without a Power of Attorney with a gift rider, a Guardianship could become necessary and there is no guarantee that the Court will allow any of your life savings to be protected. Doing nothing could also cause your estate to go through probate. Probate is a Court proceeding to determine the validity of your Will and to carry out the terms of your Will. Probate can be expensive and time consuming. The next newsletter in this series will discuss the advantages and disadvantages of long term care insurance. At the Koldin Law Center, P.C., with offices in Syracuse , New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care. Our attorneys are available to discuss your estate planning options. We do not charge a fee for the initial consultation.

At that appointment, we will review with you all of these options: (1) Doing Nothing (2) Purchasing Long Term Care Insurance (3) making gifts to your children, and (4) transferring your savings and family home to an Irrevocable Family Trust. We welcome your children, family attorney, accountant, and/or financial planner to be present at the initial consultation. There is something you can do.