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Long-term care insurance, policies that provide benefits if
purchasers have to move into nursing homes or need home care, used
to be associated with the elderly. But providers have begun
marketing long-term care insurance to younger men and women.
MassMutual has even teamed with the U.S. Chamber of Commerce to
offer long-term care insurance to small-business owners. But
insurance analysts say such insurance is an unwise investment for
entrepreneurs in their 30s and 40s.
"At that time in your life, you're worried about lost income from missed work, and missed work would be covered by disability insurance," says Patrick Brady, executive director of Citizens for Long Term Care, an organization representing all segments of the long-term care debate.
In contrast, people in their 50s, 60s and 70s are more concerned
about protecting their assets in case they have to move into a
nursing home, and therefore could use long-term care insurance.
Brady suggests entrepreneurs wait until they turn 60 to buy a
policy-a time when long-term care insurance is still affordable-and
buy the most flexible option possible.
writer specializing in business and finance.
Estate of
Affairs
Since Congress repealed the federal estate tax in 2001,
entrepreneurs have welcomed the opportunity to inherit or pass on
their businesses without paying any tariff. But in some places,
that opportunity will never exist. Confronting massive deficits and
compelled by law to balance their budgets, 11 states and the
District of Columbia have "decoupled" from the federal
estate tax repeal. In other words, they will not repeal their state
estate taxes, tariffs most entrepreneurs never paid before because
they previously received a credit for paying the federal tax and
applied this credit to their state estate tax. Now, however,
small-business owners in these areas will have to pay a state
estate tax, and more entrepreneurs will be affected, because states
have a lower threshold-$675,000 compared with $1 million under the
old federal law-for taxing estates.
What's more, says Elizabeth McNichol, senior fellow at the
Center on Budget and Policy Priorities, a nonpartisan Washington,
DC, think tank, more states may follow. "The economic stimulus
package could cut harder into state revenues and many state
governments [will] decouple from the estate tax to
compensate," McNichol says. Still, entrepreneurs can take
comfort in the fact that family-owned companies are often able to
defer state estate tax payments for up to 14 years. To learn more
about estate taxes, visit www. cbpp.org.
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This story appears in the April 2003 issue of Entrepreneur. Subscribe »
