For your affluent clients, Long-Term Care (LTC) Planning is usually more about tax efficiency and convenience than safeguarding financial well-being or ensuring a comfortable future.  In the past, traditional long-term care insurance was the default option for an LTC Plan; however, today’s Asset-Based solutions offer a unique strategy to implement a Long-Term Care (LTC) Plan as a Look-Alike Roth IRA......but without income limitations associated with a Roth IRA.  

This innovative approach combines the benefits of LTC Planning with the tax advantages of a Roth IRA, offering you an attractive alternative.  Here are some advantages of this strategy and why it could be a wise choice for your clients to consider.

Tax-Advantages

One of the primary advantages of a Look-A-Like Roth IRA as LTC Planning is the tax benefits it provides. Contributions to a Roth IRA are made with after-tax dollars, and qualifying withdrawals in retirement are tax-free. Similarly, a properly structured LTC Plan allows your clients to “contribute” after-tax dollars towards the plan, ensuring that the benefits available for LTC are also tax-free.  This tax-efficient structure allows significant savings versus the potentially substantial tax liabilities when paying for LTC from taxable sources.

Estate Planning

For clients with complex estate planning needs, protecting hard-earned wealth from the potentially devastating costs of LTC is a top concern.  Utilizing the Look-Alike Roth IRA for LTC Planning allows you to allocate a small portion of your client's assets to fund significant future LTC needs, all while preserving the value of their estate.  Since the benefits received from the plan are tax-free, they can be used to cover the costs of care without depleting other assets or triggering potential tax obligations.  This strategic approach allows for efficient estate planning, preserving their wealth for other financial goals, charitable inclinations, or legacy planning for future generations.

Flexibility and Control

There is a “Live, Quit or Die” value proposition that appeals to the affluent, who value autonomy and want to ensure their LTC Planning needs are met according to their preferences.  Where traditional LTC insurance policies lack cost certainty, tax-deferred growth, or residual value at death, an LTC Plan structured as a Look-Alike Roth IRA provides your clients greater flexibility and control over their LTC strategy.  By designating a portion of their assets to fund the plan, they can ensure that every dollar will (1) be used for care, (2) be returned to their estate upon death, or (3) some significant percentage is available if they discontinue the plan altogether.  

Long-term care Planning, structured as a Look-Alike Roth IRA, is a compelling strategy that combines tax advantages, estate planning, and flexibility for your clients and their families.

20230712