The Challenges Of Paying for Long Term Care on Your Own
By Elder Law Attorney Rick Law. Founding Partner of Law Elder Law – West of Chicago in Aurora, IL There are many issues that can affect a person’s self-funding options for long-term care. These can include:
- Market conditions – Markets go up and markets go down. In a situation where the market drops and an individual or one spouse in a married couple needs care, there could be pressure to sell assets for the liquidity that is needed to pay for the care. However, any loss in income that results from exposure to the decline in the market may render the family unable to pay for both lifestyle needs, as well as care. In addition, even if the family does not need to currently invade investment principal to pay for care, they may be compelled to sell assets anyway because they fear that the market may drop even further or fail to recover.
- Liquidity – If the individual or family has most of their assets placed in investments that are hard to liquidate such as real estate or a business, then self-funding the long-term care costs may force them to sell these assets, also at reduced prices.
- Taxes on the sale of assets – When individuals sell assets, they are likely to have to pay capital gains taxes on the gain.
- Lifestyle – The issue of lifestyle should never be underestimated. The income that is generated from an individual’s or a family’s portfolio may be able to support their lifestyle, but will it be able to support both lifestyle and paying for long-term care at the same time,
- Legacy assets – Does the family own inherited property that they intend to pass along to the next generation?