The Gift Of Long-Term Care

When high-net-worth families think about gifting, they often focus on asset-based strategies such as cash transfers, trust funding and charitable donations. But there's another powerful and often overlooked way to support the people you care about most: gifting long-term care coverage.

Whether it's providing a policy for a parent or an adult child, long-term care (LTC) coverage can serve as both a financial safeguard and a thoughtful, strategic tool. It can help ensure that future care needs don't disrupt family finances, relationships or long-term plans.

Gifting LTC: A real-world strategy for families

Long-term care isn't just a personal issue, it's a family issue. When one person needs extended care, there's often a ripple effect that impacts others: financially, logistically and emotionally. Affluent families who have helped cover the cost of a parent's care often understand this firsthand.

Increasingly, people are taking proactive steps to protect family members from that uncertainty. Some purchase LTC policies for adult children, while others fund coverage for aging parents. In each case, the motivation is to protect loved ones while preserving wealth.

In one example, a couple in their late 60s used their annual gift tax exclusions to purchase hybrid LTC policies for their two adult children. Over a 10-year period, they gifted $170,000 in total premiums and created over $4 million in tax-free future benefits. If care is never needed, the policies include return-of-premium features or death benefits that go back to the family. It's a strategy that reinforces both their legacy and their peace of mind.

How it works—and why it matters now

There are several ways to structure a long-term care gift. Some pay premiums directly on behalf of a family member, while others use irrevocable life insurance trusts (ILITs) or gifting strategies to remove future benefits from their estate. In most cases, policies can be designed to fit within the IRS annual gift exclusion limits, which makes the approach both tax-efficient and estate-friendly.

Planning early is critical. Being more proactive opens the door to better pricing, more favorable underwriting and greater flexibility in policy design. Waiting often leads to fewer policy options, higher premiums or underwriting challenges due to common health conditions.

When the gift is for an aging parent, long-term care coverage offers more than just financial protection. While high-net-worth individuals are less likely to provide direct physical care, one adult child may still take on the role of care coordinator. Without a plan in place, that person could be faced with navigating care decisions, managing cash flow and overseeing billing—all while trying to maintain family harmony and protect the legacy their parents worked to build.

Gifting LTC coverage helps shift those responsibilities from reactive to proactive. It can provide clarity, control and a built-in funding strategy, all of which reduce the potential for stress on conflict down the road.

A gift with lasting impact

Gifting long-term care coverage isn't just about managing risk. It's about being intentional and reducing the financial burden on future caregivers while protecting assets that were meant to support long-term goals like philanthropy or generational wealth transfer.
Because policies vary widely in cost, benefits, and flexibility, it's essential to work with an independent advisor who can compare options to find a solution best suited for your goals. Contact us to start the conversation today, because early planning gives you and your family more choices, more control and greater peace of mind.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.