An annuity is usually a financial product someone purchases where they trade a lump sum of money in exchange for a monthly stream of income plus a little interest. And, for some, they are a good thing.
But for a family facing Alzheimer’s, you have to be very careful. The likelihood of your loved one needing nursing home care down the line, and having to either immediately or eventually qualify for Medicaid to pay the extraordinary costs is very high.
If set up the wrong way annuities can seriously harm your chances of getting Medicaid, or at least subject you to long penalty periods where you would be ineligible. In general (it depends on your state) annuities have to be irrevocable, non-assignable, expected to return at least all of the principal and some interest during your loved ones expected lifetime and name the state as a remainder beneficiary. Again, your state’s rules may vary. I see annuities set up incorrectly all of the time.
It can become very difficult to undo what’s already been done, so it’s critical to work with a highly qualified professional to set up an annuity. It’s even more critical to first determine if an annuity is appropriate in the first place.
Many annuities don’t meet these guidelines. I’ve seen people with annuities that were issued when the person was 80 yet will pay out up to 40 years. I’m no mathematician, but that sounds like right around 120 years old!
Just be cautious, do your homework and make sure any annuity you purchase meets requirements you can live with.
Brian Willie is an Elder Law Attorney in both Texas and California. He helps families facing Alzheimer’s come out on the other side with their dignity and finances intact. For more information and a FREE ebook on Paying For Alzheimer’s Care, head on over to http://www.PayingForAlzheimersCare.com
