In our last post, we looked at how cashing out a Viatical or Life Settlement is the ninth option for paying for long-term care. This week, we’re exploring how a Charitable Remainder & Medicaid Disability Trust can be utilized as the tenth way to pay for long-term care.

Creating a trust is a sophisticated form of financial planning, but one that can be very helpful for a senior needing to pay for long term care. There are two types of trusts that The U.S. Administration on Aging (from the Dept. of Health and Human Services) allow for the payment of of long term care. One trust is called a “Charitable Remainder Trust,” while the second is a “Medicaid Disability Trust.” We’ll unpack how these work a bit more below.

 

What are Some Advantages to Utilizing a Charitable Remainder & Medicaid Disability Trust to Pay for Long Term Care?

A Charitable Remainder Trust is generally thought of as being created to ultimately benefit a charity upon death, however the US government permits such a trust to help pay for long term care for the senior. One advantage to using a Charitable Remainder include its quick access to cash, the tax benefits of maintaining such a trust, and the fact that the balance of the trust will pass on to the charity once the senior dies. On the other hand, a Medicaid Disability Trust is one that intended for someone under the age of 65 with disabilities who would quality for public benefits. Such a trust can also help pay for that senior’s future long term care, which provides a life-line to otherwise in accessible cash.

 

What are Some Disadvantages to Utilizing a Charitable Remainder & Medicaid Disability Trust to Pay for Long Term Care?

One disadvantage to utilizing a Charitable Remainder or Medicaid Disability Trust is that it requires first being set up with the help of a qualified tax advisor or professional. It may be that such trusts do not match every senior’s circumstances. Another disadvantage to using a Charitable Remainder is that it can drain the resources that were originally intended to benefit the charity. However, for some seniors, a Charitable Remainder or Medicaid Disability Trust can be the perfect choice to pay for long term care.

In our next post, we’ll explore the eleventh and final option for paying for long-term care as we consider the pros and cons of that particular way to pay. Get ready for the finale!

Need help paying for skilled nursing or at-home care? Download our entire “11 Ways To Pay for Long-Term Care” booklet, and share it with your entire family.