Do You Have a Term, Universal, Whole or Group life insurance policy?

If you have an existing Term, Universal, Whole or Group life insurance policy, you may be eligible to set up a Long Term Care Benefit Plan.  To fund the Plan, the insurance policy will be sold and the proceeds will be deposited in an irrevocable, FDIC insured Benefit Account.  Importantly, the sale of the life insurance policy is executed in a manner intended to comply with state specific Life Settlement regulations.

Once the sale is complete, monthly tax-free payments will be made automatically from the Benefit Account to the care provider of the family’s choice.  From the time that the family decides to accept an offer for the insurance policy, payments to the care provider can begin in as little time as 30 days.  If care needs change, the family can simply update the account instructions and payments will be directed to the new care provider.  The amount of the payment can also be changed at the family’s direction.

Each account provides a tax-free final expense payment to help with funeral costs.  In addition, if there is any remaining account balance when the person receiving care passes away, the balance will be distributed tax-free to that person’s designated beneficiaries.

A Long Term Care Benefit Plan is a unique, tax advantaged financial option that extends the time a person would remain private pay and delays their entry onto Medicaid. All health conditions are accepted, there are no wait periods, no care limitations, no costs to apply, no requirement to be terminally ill, and there are no loans or premium payments. Policy owners use their legal right to convert an in-force life insurance policy to enroll in the Medicaid qualified Benefit Plan, and are able to immediately direct tax-free payments to cover their senior housing and long term care costs.

The Long Term Care Benefit is an accepted form of payment by every Home Care, Assisted Living, Memory Care, Nursing Home, and Hospice company in the United States.

*Please note that the tax treatment of the proceeds from the sale of a life insurance policy will depend on many factors, including but not limited to who owns the policy, the health of the insured, the use of proceeds, the size of the estate and the state in which the policy owner lives (for purposes of state taxation).  This material does not constitute tax, legal or accounting advice; and it cannot be used by any taxpayer for the purpose of avoiding any IRS penalty.  Anyone interested in selling a life insurance policy in order to fund Long Term Care Benefits should seek professional advice based on his or her particular circumstances from an independent tax advisor.



David Wingate is an elder law attorney at the Elder Law Office of David Wingate, LLC. The elder law office services clients with powers of attorneys, living wills, Wills, Trusts, Medicaid and asset protection. The Elder Law office has locations in Frederick and Montgomery Counties, Maryland.

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