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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76397  
Subject: Re: BruceM, et. al. Date: 8/15/2007 11:35 AM
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Ouch! But unfortunately, this stuff happens.

I just recently went through a similar case. Spending down one's taxable estate by buying a life (or period certain) annuity is certainly one strategy. Although it sheds an asset, it does however create a new source of income that, depending on the state, may or may not qualify the individual for Medicaid. But a lump sum withdrawal on a large IRA and the annuity income this would generate????

There are several ways to qualify an individual for Medicaid eligibility, depending on State laws and whether the individual is married or not, so it would be tough to say whether the elder-law attorney's advice had credibility or was simply based on annuity commissions or the ability to assess large fees.

If the life annuity was the only product involved, this doesn't sound like an action that would violate fiduciary standards that an investment advisor would be held to, but instead sounds like a form of legal malpractice or perhaps a violation of 'sutiability' standards most state insurance commissioners require of insurance licensees. So it seems logical that the client (or a family member) should, as suggested, call the state bar association, as they have a vested interest in holding their members accountable, and perhaps a call to the State Insurance Commissioner's office to see if there might be some form of recourse.

Post back with what you find

BruceM
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