As people approach retirement, paying unnecessary taxes and the high cost of long-term care are two of the chief financial concerns they face. However, there are ways to protect themselves from those costs using financial, tax and legal planning.

The average monthly cost of nursing home care in Nevada in 2018 was $8,228 for a semi-private room. Residents can only have $2,000 worth of assets to qualify for Medicaid coverage. They must reach that level at least five years before applying for coverage.

Consider an asset protection trust

Medicaid looks at an applicant’s countable assets, such as savings and checking accounts, retirement funds and a second home for the past five years. Any amount over the $2,000 limit must be spent on nursing home care before benefits can begin.

However, an asset protection trust created before the five-year period is a way to secure Medicaid benefits for long-term care while assets inside the trust can help pay for additional services. For married couples, it also gives a healthy spouse the ability to pay for their loved one’s care.

Choose investing options carefully

Once an asset protection trust is created, there are many options to grow the fund. However, be aware of the potential tax consequences for these common investing methods:

  • Brokerage accounts: All growth is taxed at capital gains rates
  • Roth IRAs: These are qualified accounts and cannot be owned by a trust

Seek legal guidance for protecting your assets

Protecting assets is vital for many people who don’t want all their hard-earned money spent on nursing home care instead of helping provide a secure future for their loved ones. An experienced asset protection attorney here in Nevada can help you decide what options make sense for you and your family’s physical and financial well-being.