16 Jul How to Plan for Long-Term Care Without Draining Your Estate

Estate planning is about protecting everything you’ve worked so hard to build. Whether you’re planning for your own retirement or helping an aging parent explore their options, don’t forget to include a plan for long-term care. Many people who make this mistake end up losing their life savings or even their house.

The cost of long-term care can add up quickly. If you want to leave an inheritance behind, you need to plan ahead. Here’s how to protect your assets, your family’s future, and your peace of mind.

Can a Nursing Home Take Your House?

Technically, no. But without the right planning, your assets might have to be sold in order to pay for your care. 

In Arizona, the average cost of a private room in a nursing home is over $100,000 per year. If you or your spouse needs long-term care, this expense could exhaust your personal savings and investments, and even put your home at risk.

This is especially concerning if you were planning to leave your home or savings to your children, grandchildren, or charitable causes.

How Do I Protect My Assets from Long-Term Care Costs?

The best way to protect your estate is to start planning now. The earlier you prepare, the more options you’ll have. Here are some of the strategies we recommend to our clients.

Set Up an Irrevocable Trust

A trust is one of the best ways to keep your assets safe from being spent down. By placing your home, savings, or other property into an irrevocable trust, you remove them from your personal ownership. 

That way, your assets in the trust are protected from collectors. This can also be a good strategy if you need to downsize your estate in order to qualify for Medicaid or government benefits. It takes careful planning, though. You’ll have to get started at least five years in advance of needing long-term care, due to Medicaid’s “look-back” rule. 

Consider Long-Term Care Insurance

Buying a long-term care policy can help cover expenses like assisted living, in-home care, or nursing home stays. Insurance can be expensive, especially as you get older. But for some people it offers peace of mind and more financial flexibility.

Use a Transfer-on-Death (TOD) Deed

In Arizona, a TOD deed bypasses probate. After you die, the transfer of ownership happens automatically, without any delays. As long as it’s set up ahead of time, a TOD deed can help prevent your house from being sold to cover care costs. 

Create a Life Estate

A life estate allows you to stay in your home while granting future ownership to someone else. Most people choose to name their children, but you can name anyone over the age of 18. It can help you avoid probate and protect your house from being counted as an asset, but it’s not always the best fit if your situation changes down the road.

Make Gifts to Family Members

You can give away money or property during your lifetime, but timing is everything. If you gift too much too close to needing care, Medicaid might penalize you. Make sure to talk to your estate planning attorney before transferring any major assets. 

Consider Medicaid-Compliant Annuities

Annuities can convert a lump sum into a fixed monthly income stream. Used correctly, they can help one spouse keep some income while the other receives care. However, annuities are not one-size-fits-all, and they can be complex to set up.

Start Early and Plan Ahead

No matter what you choose to do, the sooner you start planning, the more control you’ll have. If you’re in your fifties or sixties, now is the time to make a plan. That way, you won’t be caught off guard if your health suddenly changes or if your spouse needs long-term care. 

We’ll Help You Plan, So You Can Rest Easy

At Phelps LaClair, we help thousands of Arizona families protect what matters most. Whether you’re concerned about nursing home costs, want to keep your home in the family, or simply don’t want to leave a legal mess for your loved ones, we can help you build a plan that works.

Contact us today to schedule a consultation, and we’ll help you start planning ahead for long-term care.

Images used under creative commons license – commercial use (7/14/2025). Photo by Dominik Lange on Unsplash