Leverage Your IRA To Pay For Long-Term Care Insurance And Benefit Your Heirs

Most people tend not to carry long-term care insurance coverage because of the high costs.

However, what most people don’t know is that due to the strain on Federal and State budgets because of the use of Medicaid, the federal government has created very attractive tax incentives and options for people to leverage their own funds to pay for care. This means if you have an IRA, you may be able to pay for long-term care insurance using those funds tax-free. This is beneficial to you, the account holder as well as your heirs.

Here’s why.

If you were simply to leave your retirement account to your children upon your death, they must pay up to 30% in taxes on the account. However, you can roll all or a portion of a retirement account into a life insurance policy with long-term care rider. When and if you do that, all money withdrawn for care is tax free. Additionally, any amount not used for care that is distributed to beneficiaries upon death is also tax free, potentially increasing the inheritance by 30% or more. Most importantly, if you end up not using the funds for care, the asset is not “lost” but is payable to beneficiaries.

In my next article, I will elaborate on how to take the steps to fully leverage your retirement account for the purposes of paying for long-term care. In the meantime, if you need immediate help in learning how to roll your retirement account into an insurance policy with a long-term care rider, contact our offices.

Looking to find an experienced estate lawyer in the Georgia area who is skilled in asset protection and estate plan preparation? Shannon Pawley is an attorney in Georgia with expertise in estate planning and asset protection. Shannon can provide assistance with creating an estate plan to include making a will and how to establish a trust properly. If you have questions about asset protection or questions about making an estate plan, reach out to Shannon and she will be glad to help answer all the estate planning questions you might have!

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