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LTC Planning for High-Net-Worth Families

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By: LPL Financial

November 28, 2023

Long-term care (LTC) planning is a significant financial decision that requires thoughtful consideration and precise planning. This undertaking can be more complex for high-net-worth families due to a more extensive and diverse asset base and other considerations. LTC costs can unravel even the most thoughtful financial plans if not planned for, undermining suitable wealth management strategies. Understanding the intricacies of an LTC plan becomes even more critical for families with substantial financial resources who want to protect their assets with LTC insurance.

First, it's essential to understand the concept of LTC. LTC comprises various services to manage personal care needs rather than ongoing medical care. Many LTC services include assistance with routine daily activities, such as bathing, dressing, or even complex tasks like managing money, taking medication, or shopping.

High-net-worth families must conscientiously plan for long-term care needs, given the potential for high medical costs in the future. A comprehensive plan would cover factors like care required, the projected length, cost-affordability, and the funding source. Understanding the potential impact on the family's wealth and the legacy they wish to leave behind is also crucial.

When discussing LTC planning, the immediate question is: What financial resources are available to fund long-term care? For high-net-worth families, the answers can be as diverse as their assets and portfolios. Existing assets and investments, retirement savings accounts, insurance policies, annuities, and trusts come into play when financing LTC.

High-net-worth families typically have a variety of options for funding long-term care. The most common options are self-paying by leveraging existing assets and income, LTC insurance, or combining both. It's crucial to remember that each option has pros and cons, and how to pay for care may depend on the family's financial resources and individual healthcare needs.

One of the potential challenges in LTC planning is the rising cost of healthcare and LTC services. The associated costs can drain estates significantly, disrupting wealth preservation strategies and impacting the family's future savings. Therefore, a comprehensive LTC plan must anticipate the rising cost of care and inflation.

The choice of an LTC facility is another crucial factor families must consider. The choice of facility involves the quality of care and the financial aspect. High net-worth families may prefer upscale facilities with higher costs, so including them in the LTC plan is essential.

LTC planning is undeniably an intricate part of the financial planning process for high-net-worth families. By considering the potential future healthcare needs and how they intend to pay for care, families can determine what is appropriate for their situation. Ultimately, LTC planning is vital to maintaining wealth and knowing that LTC needs will be met when needed.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This article was prepared by Fresh Finance.

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