Long-Term Care Could Eat Into Your Children's Inheritance. Here's How to Prepare
Long-term care can cost more than $100,000 a year and potentially reduce the assets you leave behind. Here's how to plan for care while keeping your estate goals in mind.
You may envision aging in place and remaining independent throughout retirement. But as you plan for the years ahead, it is also important to consider the possibility that you may eventually need some form of long-term care.
According to the U.S. Department of Health and Human Services, approximately 70% of people turning age 65 can expect to need some form of long-term care during their lives. Long-term care costs can add up quickly, potentially affecting both your retirement savings and the assets you hope to leave behind.
A Morning Consult survey commissioned by Kiplinger as part of our Trillion Dollar Talk campaign found that 47% of parents expect to leave a meaningful inheritance. But even a carefully planned inheritance can be affected by expenses later in life, particularly the cost of long-term care. If leaving money or other assets to your children is important to you, planning for those potential costs now can help protect your own financial security while preserving more flexibility for what you ultimately leave behind.
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How long-term care costs can affect an inheritance
Long-term care can be expensive, and what you pay will depend on the type of care you need and where you live. According to the CareScout 2025 Cost of Care Survey, national median costs for several common types of care include:
- In-home care: $80,080 per year, assuming 44 hours of care per week
- Assisted living community care: $6,200 per month, or $74,400 annually
- Nursing home care in a semi-private room: $315 per day, or $114,975 annually
- Nursing home care in a private room: $355 per day, or $129,575 annually
Paying for several years of long-term care could significantly reduce your savings and other assets, leaving less to pass on to your heirs. It's a concern shared by many parents. The Trillion Dollar Talk survey found that 24% of parents surveyed worry long-term care or healthcare costs could deplete their estate.
While you may want to preserve an inheritance for your children, your own retirement and care needs should come first. Planning ahead can help you prepare for those costs while protecting your broader financial goals.
Build long-term care into your financial plan
Because you may need long-term care at some point, it is important to plan for how you would cover the cost before you actually need care.
Savings and retirement income may be part of that plan. If you are eligible for a health savings account (HSA), it can provide a tax-advantaged way to set aside money for future health care expenses.
HSA balances roll over from year to year, allowing you to build up funds that can be used tax-free for qualified medical expenses. You can also use HSA funds to pay qualified long-term care insurance premiums, subject to annual IRS limits based on your age.
Long-term care insurance is another option to consider. Medicare and traditional health insurance generally do not cover ongoing custodial care, such as help with everyday activities like bathing, dressing or eating. Depending on the policy, long-term care insurance can help cover services provided at home, in an assisted living facility or in a nursing home.
Coverage varies by policy, so it is important to understand what you are buying. Policies typically have an elimination period before benefits begin and limits on how much they will pay per day or month and over your lifetime. Premiums, benefit amounts and covered services can also vary considerably.
No single strategy will be right for everyone. Your approach might include a combination of savings, retirement income, insurance and other assets. As your finances and circumstances change, revisit your plan to make sure you have adequate resources to cover potential care costs.
A financial adviser can also help you evaluate your options and how they fit into your broader retirement and estate plans.
Use the tool below to connect with a vetted financial professional:
Make sure your estate plan reflects your priorities
An estate plan can include a will, trust, power of attorney and other documents that outline how you want your finances, property and other affairs handled during your lifetime and after your death. Yet the Trillion Dollar Talk survey found that nearly 3 in 10 parents have no formal estate plan, while 41% have a will.
If you already have an estate plan, review your will, trust, beneficiary designations and other documents periodically to make sure they still reflect your wishes. As part of that review, consider how potential long-term care expenses could affect the assets you expect to leave to your heirs.
When you develop or review your estate plan, keep in mind that the value of your assets today may not reflect what is ultimately passed down to your heirs. Retirement spending and long-term care costs can reduce your assets over time, potentially leaving a smaller inheritance than you originally planned.
Talk to your children about what to expect
Talking to your children about your estate plan can be difficult, and many families put off the conversation. The Trillion Dollar Talk survey found that roughly two in five families have never discussed plans for passing down money and assets. Among parents who haven't discussed their plans in detail, 34% say there are too many unknowns, including how long they will live and how much they will ultimately have to leave behind.
You don't need to provide an exact inheritance amount. Instead, the conversation can focus on the plans you have in place and how your assets may be used during your lifetime, including how to pay for long-term care.
This is also a good time to discuss whether you expect your children to play a role in your care or help manage your finances. Make sure they know where to find important information, including details about your financial accounts, life and long-term care insurance policies, will and other estate planning documents.
Having these conversations before a health crisis gives your children time to ask questions, understand your wishes and prepare for any responsibilities they may take on. It can also help avoid confusion or difficult decisions during an already stressful time.
Ultimately, the inheritance you expect to leave may change as your care needs and expenses evolve. Planning for those costs now can help you protect your own financial security while giving your family a clearer idea of what to expect.
More Trillion Dollar Talk
- The Great Wealth Transfer is Creating a New Generation of Family CFOs
- Long-Term Care Insurance: 10 Things You Should Know
- These Are the 2 Legal Documents Everyone Should Have, Courtesy of an Estate Planning Attorney
