LONG TERM HEALTH CARE
A Private Asset Protection Trust
According to the recently released 2011 Cost of Care Survey by John Hancock, the average daily cost of a private nursing home room in the U.S. averages $235, or almost $86,000 annually. The annual cost for an assisted living facility averages almost $40,000, and home health aide costs average more than $37,000 a year.
In most states, annual long term care costs are higher than the national average: more than $91,000 for a private nursing home room, almost $78,000 for a semi-private room, $42,000 for an assisted living facility and over $48,000 for a home health aide.
For many, especially the elderly, purchasing long term care insurance is too expensive. One alternative that is gaining in popularity is the establishment of a Long Term Care Asset Protection Trust, which can shield lifetime savings from being devastated by a long term illness.
A Long Term Care Private Asset Protection Trust is an irrevocable trust, which places some limits on the control the grantor has over the assets placed in the trust. Under the trust terms, the grantor can receive all the income from the assets in the trust, but not the principal. Since the grantor no longer has total control over the trust assets, they will not negatively impact the grantorís eligibility for long term care Medicaid services.
A Long Term Care Asset Protection Trust can also provide income tax advantages, and can be structured to allow the assets to obtain a step-up in value so heirs will not be subject to additional capital gains tax.