A serious illness of a loved one can have a grave financial, emotional, and physical impact on a family. Throughout our lives, we will all know or live with someone who needs long-term care. The costs of providing care for a disabled person can be significant, and can cause a family to suffer emotional and financial hardship. But with proper planning, family businesses can minimize these hardships.

The emotional impact of providing care to a loved one can certainly be overwhelming. Not surprisingly, many studies show that taking care of someone who is chronically ill has a negative physical and mental impact on those involved. The stress can frequently cause misuse of alcohol and prescription drugs, as well as cases of depression and coronary heart disease.

Your family finances and wealth are also negatively impacted by a family member's need for long-term care. According to several studies, the typical cost to stay in a nursing home is approximately $72,000 annually. A typical stay for a patient is around 3 years.

Even if you choose to take care of your loved one yourself, the costs can still be high. For example, research studies indicate that wage, Social Security, and pension losses due to caregiving is on average $304,000. In realizing this potential situation, we can understand how a sickness can gravely impact your family finances, harmony, and dignity.

To help prevent emotional and financial problems, it is essential to discuss your situation as a family and come up with a long-term care plan with your advisers. Your strategy should consist of two primary goals. First, is to protect the physical and emotional welfare of your family member by managing their care; not providing it. The second objective is to sustain your family wealth. This can be done by having someone else pay for that care.

As part of your plan, you could buy a plan to cover both home health care and long-term care. Funding the costs through your business could be beneficial because of the tax benefits. If you own a C corporation, you can set up a plan that will cover you and your spouse, as well as select employees that meet certain conditions. If certain provisions are met, the fees could be tax deductible, and the benefits tax-free.

Typically, most individuals finance their premiums for life. But many businesses choose to pay the fees over a shorter period of time, say ten years. This allows them to maximize their deductions and still get coverage for life. The tax implications for caregiving policies are detailed, and mostly depend on the type of business involved. Consult your tax advisors to make sure you are following all the regulations.

It is obvious that caregiving can be a very difficult situation for a family to deal with. At some point, most families have to provide caregiving for a loved one, and it often impacts many aspects of family living. By having open communication with your loved ones, choosing the type and method of care, and developing a viable financing strategy, your family and business have a better chance at preserving family harmony and wealth.