A common worry among older adults is that they will go into a nursing home and spend all of their retirement savings on skilled care. This is a realistic concern, considering that 70% of people aged 65 and older will spend some time in a nursing home. When you realize that the monthly cost of a nursing home in California is about $13,000, you understand that it won’t take long before your savings are thoroughly depleted.

However, with advance planning and examining your options, you can create an estate plan that will protect your retirement savings, no matter what may happen in the future.

Estate Planning Goes Beyond Asset Distribution

There’s a misconception that estate planning is something only done by rich, elderly people to ensure their belongings are distributed to their heirs after they die. In truth, estate planning is something every adult should do.

Estate planning is more than just creating a will outlining your final wishes. It’s also planning for the unexpected and asset protection. Estate planning also involves:

• Naming a power of attorney to act on your behalf if you’re incapacitated
• Providing advanced directives regarding end-of-life care
• Creating trusts and naming a guardian for minor children or ones with special needs

Asset Protection Trusts

You’ve spent several years saving for your retirement. Ensuring your savings are well-protected within your estate plan is just as important. 

Medi-Cal is a joint federal and state program that can help pay for nursing home care if you meet certain financial eligibility requirements. This means that you will need to pay for your care until your savings have been spent far enough to be eligible for Medi-Cal.

An irrevocable trust can help protect your assets from being counted towards Medi-Cal eligibility. Assets transferred to this trust are no longer considered your property, allowing you to qualify for Medi-Cal. By transferring your assets into an irrevocable trust, you can protect them from being used to pay for long-term care. You can still receive income from the trust’s assets, providing financial support during your lifetime. 

Not only will a properly structured trust protect your retirement savings, but it can also offer tax advantages. When you pass away, the assets will automatically transfer to your beneficiaries without going through the probate process.

Protecting Your Retirement Savings with Long-Term Care Insurance

Long-term care insurance is another effective strategy to protect your retirement savings. This type of insurance specifically covers the cost of nursing home care, in-home care, and other long-term care services.

You should choose a policy that covers a broad range of services and provides sufficient coverage to meet potential future needs. 

Early Planning is Critical

Protecting your retirement savings requires careful planning and the right strategies. The earlier you start planning, the more options you have, and it helps ensure you are not caught off-guard by sudden healthcare needs. Our attorneys at Lonich Patton Ehrlich Policastri have extensive expertise in estate planning and asset protection. We will work with you to develop a comprehensive plan tailored to your situation. 

Contact us for a free consultation by calling (408) 553-0801. Being well-prepared for any eventuality will allow you to enjoy your retirement with peace of mind.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.