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.

Yet, did you know the the Federal government has created attractive tax incentives to help? Medicaid usage has strained Federal and State budgets. As such, these new incentives allow people to leverage their own funds for care. If you have an IRA, you might be able to take advantage of these changes. For instance, you might 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.

Planning to leave your retirement account to your children upon your death? If so, they 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. In such cases, all money withdrawn for care is tax free.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. This potentially increases 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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