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Subject:  Re: Protecting Assets Date:  12/20/1999  12:08 PM
Author:  dweiss3 Number:  16635 of 88494

I did a lot of research on this subject a few years ago for my elderly parents. Their situation was: dad got approved for long term care insurance but mom was turned down due to early signs of alzheimers. The only workable strategy we could find was the following:
Dad wanted to protect $200K of their assets if mom had to go into a nursing home. He bought a single premium variable annuity invested in several mutual funds. The plan was for him to annuitize (select a lifetime payout option for himself) if it looked like Mom had to go into a nursing home. The law says that the "community spouse's" income is exempt from consideration for use to pay nursing home costs prior to Medicare kicking in. The payments to Dad from the annuity would be considered his income as the community spouse. When the rest of their assets had been spent down for nursing home costs for Mom, Medicare would begin to pick up the tab. I checked this out with a financial planner and he agreed that this arrangement would not run afoul of the look back provisions.

This was only a partial solution. Later Mom and Dad moved to an excellent continuing care community where the nursing home on the grounds was included at no additional cost. Dad dropped his long term care insurance and has been taking the penalty free withdrawals from the annuity to pay the monthly fees for the continuing care community.

There is really no good way to protect assets in this situation. Dad is stuck with an annuity with significant costs and below average investment returns and several more years of declining surrender charges if he wants the rest of his principal back. The rules are very complex so professional advice is recommended.

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