There are three reasons why many farm families fail to consider planning for long-term health care when doing business transition and estate planning:
- They don’t realize the odds of needing long term care.
- They don’t realize that long-term care costs have exploded in the past five years.
- They have misconceptions about how to shelter their assets from long-term care costs.
The Hutchinson (MN) Leader reports in a recent article, “Why farmers need to plan for long-term care,” that long-term health care costs could be even more financially devastating to a farm business than any tax issue. The article emphasizes that long-term care costs can thwart all of your transition and estate planning, if it’s not addressed.
Currently, 50% of those Americans 65 or older will have some type of stay in a nursing home. One in 10 will have a nursing home stay that will be more than five years. Of those now getting nursing home-level care, 40% are younger than age 65.
A recent survey estimates that long-term care costs on average $65,000, with a private nursing home room at $97,000. At the most, Medicare will pay for a 100-day stay in a nursing home, if certain criteria are satisfied.
Note that Medicaid eligibility rules say an applicant can’t own more than $3,000 worth of assets and prepaid burial proceeds. In addition, life estates and most trusts won’t shelter assets from long-term care costs. If assets are given away, it must be done 60 months before the donor can qualify for Medicaid.
In Minnesota, the only sure way to protect farm business assets from long-term health care costs is to buy long-term care insurance. Ask an elder law attorney about your long-term health care planning to avoid making mistakes.
Reference: Hutchinson (MN) Leader (March 11, 2017) “Why farmers need to plan for long-term care”