Want to Safeguard Your Estate to Your Heirs?

There has been a lot said in our past newsletters regarding how long term care insurance is an important part of retirement planning. After all, with long term care expenses averaging almost $58,000 per year, most people need the protection. But have you ever thought about how long term care insurance may perhaps help you protect the assets you hope to give to your loved ones?

Preserve the step-up in cost basis
Did you buy property years ago that has grown significantly in value? If you are forced to sell to pay long term care expenses, you will face a capital gains tax. On the other hand, long term care insurance might let you keep your property, pass it to your heirs, and avoid the tax.

Avoid taking a loss
What if you own investments that have suffered losses over the past few years? Perhaps you don’t want to sell them because you believe they will recover and were just part of the market’s downturn. Long term care insurance can provide the liquidity you may need without forcing you to sell your assets and take a loss.

Tax free transfer to heirs
Some long term care insurance companies offer a “return of premium at death” option. Since this is an insurance death benefit, it will be income tax free for your beneficiaries. And if you are not the policy owner, it should not be included in your taxable estate.

Move assets from your taxable estate
Suppose you have enough liquid assets to cover any possible long term care cost, but you want to reduce your taxable estate. You could set up an irrevocable trust to own a long term care insurance policy, and you would pay the premiums directly to the insurance company. If you were to need long term care, you would pay the expense yourself, and the trust will receive tax-free benefits from the insurance company. And if there is a return of premium at death option, all of the premiums that you had paid will go tax-free to the trust.

If you want to learn how to prevent your estate from being drained by long term care expenses, please contact me for more information. To schedule a complimentary meeting, either in person or by telephone, please use the use the CONTACT US link and let me know.

I look forward to meeting you!