Archive for the 'Annuities' Category
Posted by Jerrold Bartholomew on September 7, 2008
Drew Sygit, a certified mortgage specialist from the Lending Edge Team in Rochester Hills, Michigan sent me some interesting thoughts regarding the government takeover of Fannie Mae and Freddie Mac over the weekend. Drew offers several helpful points:
- Look for mortgage-based lending standards to become even stricter in the coming months.
- Look for increased flexibility in workouts and mortgage rehabilitation for distressed homeowners. Cash flow means everything under the present circumstances and policies geared toward keeping people in homes and making some payment may become more widespread. Drew explains that the irrational policies of the past that left properties vacant when the homeowner could have made substantial partial payments were largely a consequence of privity of contract. Going forward from the takeover, it appears possible that partial forgiveness of debt or debt-restructuring will be considered in order to keep people in their homes and keep some cash moving.
- The federal takeover is calculated to produce stability in the real estate and lending markets.
Drew Sygit’s complete email can be read in pdf here.
The fact that previous policies protected the contractual rights of the purchasers of mortgage debt on the secondary market makes me wonder whether the new policies have the potential to harm the purchasers of mortgage backed securities (MBS)—like pension funds and insurance companies. In other words, it appears likely that the mortgage meltdown will expand to other financial markets. The question for most seniors is whether the failure of Fannie and Freddie will be significant enough to impact their savings in life insurance products like annuities or whole life insurance. Comments are open.
Posted in Annuities, Asset Protection, Detroit Elder Law, Estate Planning, Michigan Elder Law, Mortgages, financial planning | Tagged: Estate Planning, Elder Law, financial planning, Mortgages, Financial, Investments, Pension, Fannie Mae Takeover | No Comments »
Posted by Jerrold Bartholomew on April 7, 2008
Retirement assets (401ks, IRAs, etc) are considered available assets for purposes of Medicaid qualification in Michigan. In simple terms, that means that those funds have to be spent down until the threshold for asset eligibility is met. In the case of a single person, asset eligibility is generally about $2,000.00, with some additional allowances for the homestead, modest life insurance and funeral expenses. In the case of a married person, the threshold is higher, and will be between $20,880.00 and $104,400.00, depending on the couple’s assets before entering the nursing home. For more details, see The Basics of Medicaid Qualification, below.
In order to avoid having to spend these assets on the cost of care, it is very common to annuitize the retirement assets. For a variety of reasons, I think this is something to avoid whenever possible. First of all, the return on such annuities is low. With inflation likely to increase in the present economic climate, it is difficult to recommend a long-term investment with a low return. An additional concern is that current law requires an annuity to pay out in level installments and in an actuarially sound manner. The days of the deferred annuity with a substantial amount held until after the passing of the owner are gone. Furthermore, under current law, the state of Michigan must be named as the remainder beneficiary after the community spouse or a disabled child. It is true that an annuity will provide secure retirement income for a community spouse, but it should be considered an alternative of last resort in light of these considerations.
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Posted in Annuities, Asset Protection, Disability Planning, Estate Planning, Medicaid, Medicaid Qualification, Nursing Home Crisis Planning, Technical, Transition to Nursing Home / Medicaid | Tagged: annuities, Asset Protection, Estate Planning, Estate Recovery, legal, long term care, Medicaid, Michigan Estate Planning, Michigan qualification for Medicaid | 2 Comments »
Posted by Jerrold Bartholomew on March 22, 2008
In my practice I have all too often I found evidence that my elderly clients have been victims of financial abuse in one way or another. This story shows just how common the phenomenon is:
Motivated by the high interest rates and the fear that Jeannetta, at least, might outlive their savings, the Mounceys drained their bank accounts and invested $135,000.
“With Jack being so sick, we wanted to make sure we had decent income, because I couldn’t afford our house on my own,” said Jeannetta Mouncey, 64.
Less than a year later, though, the interest checks had stopped and much of the Sarasota couple’s money was unaccounted for. Their First Liberty sales agent, Fred Howard, had disappeared. Eventually, the company went dark, too, its president locked up in an Arizona prison on securities fraud charges.
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Posted in Annuities, Asset Protection, Insurance, Medicaid | Tagged: annuities, annuity, crisis plan, Divestment, investment, law, legal, long term care, Medicaid, pre-plan, risk tolerance | No Comments »
Posted by Jerrold Bartholomew on March 10, 2008
You have perhaps heard that Michigan passed a form of estate recovery in September of 2007, becoming the last state in the union to do so. Estate recovery is a program through which states attempt to recoup the costs of Medicaid long-term care benefits paid out from the estate of the Medicaid recipient. Although Michigan has passed the necessary legislation to begin estate recovery, it will not be until the program is reviewed and approved by CMS that estate recovery against real property is officially implemented.
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Posted in Annuities, Estate Recovery | Tagged: Estate Planning, Elder Law, annuities, law, Estate Recovery, Deficit Reduction Act, Medicaid Qualification, legal, Michigan, probate, Michigan Estate Recovery, Pre-Planning for Medicaid Qualification | No Comments »
Posted by Jerrold Bartholomew on March 7, 2008
An astounding thing happened during the fall of 2007. Michigan changed its Medicaid policy with respect to annuities and implemented those changes with retroactive effect.
The new policy requires annuities to have several features in order to avoid being considered a divestment. Among the requirements is a rule that the state of Michigan must be named a remainder beneficiary to the extent of Medicaid benefits received. This law applies to all annuities purchased or altered after February 8th, 2006, the day President Bush signed the Deficit Reduction Act into law.
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Posted in Annuities, Medicaid, Medicaid Qualification, Nursing Home Crisis Planning, Transition to Nursing Home / Medicaid | Tagged: annuities, annuity, Elder Law, Estate Recovery, law, legal, long term care, Medicaid, medicaid penalty, Medicaid Penalty Period, Nursing Home, penalty period, policy | 1 Comment »
