Ice Cream and Annuities

January 29, 2010

Seniors love ‘em—and lawyers hate ‘em: annuities. Based on ample experience with both senior citizens and lawyers, I am always amazed at the depths of both the affection and the rage that are evoked by the subject of annuities. Mentioning the word “annuities’ at an attorney meeting is like yelling, “Attack!” They immediately launch into a review of the sins of annuities. Nonetheless, annuities remains one of the most frequent investments purchased in America. In fact, since the most recent 40%-plus stock market slump, annuities have risen in popularity. If annuities are so bad, how can it be that the majority of seniors own at least one annuity? What is an annuity, anyway? Annuities are an investment contract between a buyer and an insurance company. The word “annuity” is like the words “ice cream.” Ice cream comes in strawberry, vanilla, chocolate-marshmallow, moose-tracks, and many more. Well, annuities come in more “flavors” than the combined ice cream choices of Baskin-Robbins, Ben & Jerry’s, and Cold Stone Creamery. You really cannot tell a good annuity from a bad annuity without a very careful review. Annuities are backed by insurance companies and their reserves. Although annuities are not federally insured, it was interesting to see that our federal government chose to prop up AIG but let Lehman Brothers brokerage fail. AIG is the major seller and reinsurer of a large portion of the annuities sold in this country. Evidently, the government was unwilling to allow one of our largest insurance companies fail. Immediate annuities are a contract wherein an insurance company promises to pay monthly payments for a term of years or based on one’s lifetime. Lifetime payments are often very attractive to retirees, because nobody wants to be out of money before they are out of breath. Lifetime immediate annuities start paying monthly checks in the first year of the investment. They act like pensions. In fact, almost all employer-sponsored pension plans purchase immediate annuities to pay the monthly checks to company plan retirees. What makes an immediate annuity attractive to a retiree? Usually, the insurance company offers an initial interest rate above Certificate of Deposit rates. In addition, some insurance companies offer the purchaser a ‘bump’ in the imputed value of the money invested. Although these incentives look very attractive, please have the annuity contract reviewed by an independent professional who can interpret the true value of the investment. It’s also important to know what will happen after the initial ‘teaser interest rate’ has ended. What does the annuity actually guarantee as the minimum future interest rate? A good place to compare actual returns on annuities is at www.immediateannuities.com. You can get a fast, free annuity quote online. Immediateannuities.com is reputedly the number one website for evaluating immediate annuities. There are lots of other resources available at their website to acquaint you with annuity language and insurance company ratings. Don’t buy any investment without some research and/or independent advice.

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The Two Beauty Queens? Medicare and Medicaid

By Rick Law on

January 20, 2010

- Elder Law, Medicaid, Senior Citizens

Medicare and Medicaid sound the same, but they are as different as the two beauty queens you see here. Frankly, it’s surprising how many people don’t recognize the difference between the two. Few people realize the limitations of Medicare—which winds up costing them a substantial loss of dignity if or when they get hit with long term care expenses. Medicare is the federal health insurance program provided on behalf of persons who are over the age of 65, blind, and/or disabled. Medicare does not provide long term care benefits (nursing home care, for instance). Medicaid, which is a poverty health care program, pays for 50% of the nursing home care in America today. Medicare only cares about short-term or “acute care” health care. Medicare only cares about your health care expenses if you can get well! Medicare does NOT provide care when a person is diagnosed with a long-term illness and needs nursing home care. Essentially, our senior citizen health care is based on a “diagnosis lottery.” If you are “lucky enough” to have a heart attack or diabetes, then you are covered by Medicare. You are out of luck if you are diagnosed with Alzheimer’s, Parkinson’s, Huntington’s disease, or anything else that lands you in a nursing home. If you need a nursing home and you are not impoverished, you are on your own dime! So, unfortunately for seniors, the blind, and disabled persons living in 2010, the acute care model does not help them when they are afflicted with long term care costs. Medicaid is the safety net for the impoverished. Once you become sufficiently impoverished, then Medicaid is designed to provide care for you. To qualify for Medicaid nursing home benefits you must be very ill and have no more than $2,000 total assets. An elder law attorney knows the ins and outs of the public benefit system and can provide the client with solutions that help to fulfill the requirements of the law and still provide a better future for themselves or their loved ones. We help clients fulfill their legal obligations and avoid unnecessary impoverishment due to long term care expenses. If you want more information regarding a specific client situation, please contact us.

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Pigs Fly, Cubs Win, No Estate Tax

By Rick Law on

January 14, 2010

- Current Events, estate planning

Right now estate planning lawyers look like ants after the anthill has been kicked over. We are frantically scurrying in a blind search for answers to The Big Question: What are the estate planning rules now? For years, Congress has known that the current rules would fall off a legal cliff on January 1, 2010. Congress always promised to fix the “temporary” expiration of the rules before now… But as we have seen, who can trust Congress to do what needs to be done, when it needs to be done? All nationally known estate tax gurus have believed that the likelihood of 2010 with no estate tax was as improbable as the Cubs winning the World Series, pigs flying, etc. Okay, so there is no estate tax this year… What does that mean to your existing will or trust estate plan? Answer: You should contact a skilled estate planning attorney to schedule a review of your existing estate plan! ALMOST ALL EXISTING HUSBAND-AND-WIFE ESTATE PLANS MUST BE REVISED TO AVOID SOME UNEXPECTED BAD RESULTS! I am telling all of my current estate planning clients that we will make their wills/trusts convertible so as to accommodate new tax law changes. Ignorance is not bliss! Now is the time to schedule a review of all existing estate plans!

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Don’t Cough! Call 911!

By Rick Law on

January 7, 2010

- General Interest, Health Care

A gentleman whom I respect recently shared some advice about how to provide yourself with your own self-administered CPR. The story he told happened when he was experiencing what he believed to be a heart attack. Instead of calling 911, he recruited a co-worker to drive him in rush-hour traffic to the hospital. He then started to give himself what he described as “self-help CPR”. He said, and I quote, “I had read about self-CPR and I started to use it to stay conscious. This is important. You cough hard every two seconds. It massages the heart and keeps it beating while you get help. People with heart attacks have been able to drive themselves to the hospital. I started doing that even though it hurt my chest; at least pain told me I was still alive.” It is important to note that when he finally did get to the hospital, it turned out that he was NOT suffering a heart-attack. But it made me wonder, can we really give ourselves “Cough-CPR” to save our lives during a heart attack? One of the great things about modern technology is you can look up almost anything on the internet. I went to http://urbanlegends.about.com, to check out this self-CPR idea. They report that legend of self-help CPR began with a 1999 email that was circulated which stated that you can save your own life during a heart attack by coughing. About.com experts checked it out with a number of sources and found out that it is NOT an advisable thing to do. In fact, the American Heart Association specifically states that one should not attempt self-help CPR and that there is no validation of this particular method. On the contrary, belief in self-help CPR is dangerous because it can lead you to think it is safe to drive yourself to the hospital. Doctors say that the coughing procedure has only been used in very limited and experimental occasions with patients experiencing some sort of irregular heartbeats. There are no known cases where a person who was alone survived a heart attack by using Cough-CPR. In other words, if you experience intense chest pain or other symptoms of a heart attack, don’t cough! Call 911 and allow the emergency medical system to get you the kind of help you need. *For more information on heart attacks and how to recognize the symptoms please click on the following links:

**For more information about CPR and lifesaving techniques please visit The American Red Cross.

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Robin Spang, Wonder Woman

By Rick Law on

January 4, 2010

- Our Firm

I’d like to introduce you to Robin Spang, our intake paralegal. Robin and I have known each other for many years. Robin has become one of the most valuable players on our team. That’s saying a lot, because we have a team filled with valuable players. As an intake paralegal, Robin is our front line in receiving inquiries regarding the solutions that we provide in the area of Medicaid, estate protection, VA benefits, and disability planning. When someone calls Robin, she is authorized to spend unlimited amounts of time assisting them in the discovery of whether or not we are an appropriate solution for the particular burden they are carrying. We receive a substantial number of professional referrals, and attorneys are a primary source of our business. Recently I saw that Robin had received a very complimentary e-mail from an attorney who had referred a client to us. This attorney had sent to me a string of e-mails beginning with a request regarding a Medicaid problem. The initial request went something like this: “I am inquiring to see if you could help me to decode Medicaid and real estate obligations that I’m dealing with. If this is an area that you understand, please let me know and I will call and set an appointment. I need clarity regarding what is legal and what I can do regarding my parents home, assets, and life insurance. I just need to know what their obligations are. Thank you.” The initial attorney responded by telling the prospective client that this was not an area of her practice and she wanted to refer them to Law Elder Law. Her client then contacted our firm and spoke with Robin. I don’t know how long Robin spent with her, but obviously she gave her the right kind of answers and in a way that made her feel that she had received some relief and peace of mind. She later notified her attorney as follows: “I can’t thank you enough for steering us towards Law Elder Law. What an incredible experience to have the weight of the world lifted off my shoulders. This firm is nothing but helpful and empathetic! I never thought that sitting down and talking with people from a law firm could be such a pleasant experience. I’ll be sleeping much better now. Thanks again.” Those of us here at Law Elder Law are very grateful for referrals—and for Robin, who receives those initial calls. Funny thing is, I never knew that I was working with a woman who could lift “the weight of the world.” I’m sure glad she’s here! Thanks, Robin! Rick

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Ice Cream and Annuities

The Two Beauty Queens? Medicare and Medicaid

Pigs Fly, Cubs Win, No Estate Tax

Don’t Cough! Call 911!

Robin Spang, Wonder Woman

Estate, Asset & Retirement Tax Attorneys

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