Long Term Care - Case Study

Sal Pitti |

Today's case study applies to just about everyone. 

Today I'm speaking to you from a personal perspective. One of the topics we speak to clients about is Long Term Care. It's no secret that the cost of long-term care can be devastating on family finances, let alone the families' emotional and mental state of mind. Recently, my father had his 2nd stroke in less than a year. It came as quite a surprise to us since he has always been active, fit and healthy. It has left him needing help with all the activities of daily living to include bathing, dressing, walking, toileting and eating. Regardless of what the cause was of the strokes, we're dealing with the ramifications now. Like many other seniors, my parents chose not to purchase long term care insurance 20 years ago when they retired. A year ago, at my suggestion, we met with their elder law attorney to do some planning around what would happen if one or both of my parents needed long term care. Though my parents never earned sizeable salaries, they managed to accumulate a fair amount of money over the years through wise investing. The attorney suggested that we move everything out of joint accounts and separate assets into each of their names rather than own them jointly. Since money talks at long term care facilities- the idea behind the separation of assets was to use each of their savings & portfolios as a carrot stick to apply for, and get accepted to, one of the better long term care facilities. Once Dad was admitted and the assets are used up to the allowable threshold, he would then qualify for Medicaid. Mom's assets would be protected through a spousal refusal strategy. Although this case is summarized here for brevity, all this planning should only be done with consultation of a qualified elder law attorney. 

Now for the Q&A:

Q: Will assets get passed to children upon death. 

A: Yes, whatever is left will be passed down, but maybe not as much as they had hoped to pass down. Luckily 40% of their assets are in retirement accounts which are not counted toward Medicaid asset limits. The income from the IRA's, however, is counted and would be used towards care. 

Q: What could they have done differently?

A: They could have purchased a long-term care policy or a hybrid life insurance policy to help pay the costs. The premiums they would have paid over the years would have covered about 8 to 10 months of care. A hybrid policy would have given them both long term care benefits and or a life insurance benefit. 

Q: Could they have given all their money away or used an irrevocable trust?

A: Yes, however, any gifts would have been subject to a 5- year lookback and had they gifted everything away, they would not have that carrot stick (an application showing assets) to get into a nicer facility. 

If you're concerned about Long Term Care, we should talk about your options and any strategies that you should be thinking about to include gifting, long-term care policies, life insurance hybrid policies, or irrevocable trusts. We can  then refer you to a qualified attorney for the appropriate legal advice, if needed. 


The Pitti Group Wealth Management, LLC (“The Pitti Group”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where The Pitti Group and its representatives are properly licensed or exempt from licensure.

The information contained above is for illustrative purposes only.

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.

Please note, certain Advisory Persons of the Pitti Group are also licensed insurance professionals. Implementations of insurance recommendations are separate and apart from one’s role with The Pitti Group. As an insurance professional, an Advisory Person may receive customary commissions and other related revenues from the various insurance companies whose products are sold. Advisory Persons are not required to offer the products of any particular insurance company. Commissions generated by insurance sales do not offset regular advisory fees. This may cause a conflict of interest in recommending certain products of the insurance companies. Clients are under no obligation to implement any recommendations made by an Advisory Person or the Advisor.