You’ve worked hard your entire life to provide for your family. Along the way, you’ve probably accumulated assets and built a sizable estate. When you die, you probably want to pass that legacy on to your loved ones.

Many retirees share that goal. Unfortunately, there is one significant obstacle that could stand in the way. It’s long-term care. According to the U.S. Department of Health and Human Services, the average 65-year-old today has a 70 percent chance of needing long-term care at some point in the future.¹

As you might imagine, long-term care can be costly, and it can drain your hard-earned retirement assets. A room in an assisted living facility can cost more than $3,000 per month, while a room in a nursing facility may cost twice that amount.²

Also, long-term care is often needed for years. Again, according to the U.S. Department of Health and Human Services, men need long-term care for an average of 2.2 years, while women need it for an average of 3.7 years.³

Thousands of dollars per month over multiple years can add up to a substantial amount. If you and your spouse both need care, there may be few assets left to pass on to the next generation.

There are steps you can take to provide funding for your long-term care needs while also protecting your assets. Below are two such options. They may not be right in every situation. However, you may want to consider them if you’re looking to fund long-term care and preserve your legacy.

Hybrid Long-Term Care Insurance Policies

Long-term care insurance is a popular way to cover long-term care needs. You purchase insurance with a benefit level that meets your needs. You then pay premiums to the insurer, which in turn covers a portion of your expenses if and when you need care.

Of course, the challenge is that the insurance isn’t cheap, and you may pay a substantial amount for coverage that you might not ever need. There are hybrid policies that address that concern.

For instance, you could look at a policy that also has a life insurance component. If you don’t use the long-term care coverage, your beneficiaries would still receive a death benefit. Or some policies accumulate cash value, which you can then use to pay for the care.

These hybrid policies can often be complex and may have many different features and moving parts. You may want to consult with your financial professional to make sure you understand their true costs and benefits.

Sibling Care Agreement

It’s possible that you have an asset in your estate that you and your heirs don’t want to liquidate under any circumstances. It could be a family business, a prized collection or maybe even a treasured vacation home. Perhaps your children are even willing to assist with care to protect those assets.

Some families utilize what’s called a “sibling care agreement.” It’s basically a legal document that spells out each sibling’s obligation to help cover care. For instance, one child may help by actually providing care and support in the home. Another may not be able to contribute time but could possibly contribute money.

A sibling may even choose to opt out of providing care with the understanding that their share of the assets or inheritance could be reduced. The agreement essentially puts everything in writing so you and your kids have some certainty and can plan with confidence.

¹http://longtermcare.gov/the-basics/who-needs-care/
²http://longtermcare.gov/costs-how-to-pay/costs-of-care/
³http://longtermcare.gov/the-basics/how-much-care-will-you-need/

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