Can You Protect Annuities From Nursing Home Care Costs?
We see it all the time. An individual or couple is interested in finding out how to protect their money if they have to go into a nursing home. We ask them what they own and often times they own annuities. Three years ago they bought an annuity at the bank or from an insurance company. They paid fifty thousand dollars for the annuity and it's growing, tax deferred, and now it's worth fifty five-thousand dollars. They may go into the nursing home in the future and they don't want to have to spend that money. What they can't do is just put that annuity in a child's name because an annunity that's in their name can't be transferred to a child's name without pulling all the money out of the annuity. There'd very likely be surrender charges and there would be income tax consequences. That's not a very practical option. What we often do is transfer annuities to a special type of trust, often times called a grantor trust, so there's no surrender charges due, the annuity is not being surrendered, and there are no tax consequences at that time. It's a way annuities can be transferred out of someone's name and protected from the nursing home in the event that in the future the previous annuity owner has to get long-term care in the nursing home. Annuities are special creatures; there are all kinds of different rules that apply to annuities. It's not as easy as just transferring an account or another piece of real estate into somebody's name. It's more complicated, we often have to use trusts to protect that. Planning ahead for long-term care is the key. Most people wait too late but you've really got to get started at least five years before you ever go into a nursing home. I'm Paul Rabalais and that's a little bit about Medicaid planning. Have a good one!