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If there is a need for long-term care you will need to access as much as $12,500.00 to cover each month of nursing home care, $5,500.00 per month for assisted living and $250.00 per day for live in home care.   What you don’t need are additional unexpected or hidden costs when you try to get to your money.

So what should you know in advance?

  • Will there be a penalty to access your money?
  • If yes, what will be the total cost for access? Transaction fee?  Management fee?
  • Is there an early access penalty? Some investments require you keep them for 5 years to avoid a penalty from being imposed.  How does the company selling the investment defines early access.
  • While some investments waive the penalty if you need long-term care during the penalty period time, what if your spouse needs nursing home care and you need the money to for their care?
  • CT Medicaid/T19 program requires you to surrender certain types of investments to become eligible.   If you may need this program you need to know what investments make the most sense prior to investing or if you already have those investments what the future cost will be to you.

It makes sense to consult with an experienced independent elder law attorney prior to making these investments to make sure you understand what you need to know before you commit to any investment.  In addition, you need to make sure you have the appropriate legal documents in place that will allow others to act in your place if you are unable to so they can access your money to pay for you or your spouses needs.

To give you an example I am going to tell you about a client I had several years ago.  Before I met him he was advised to invest the majority of his money into staggered annuities.  Per his financial advisor the reason for doing so was “to get the highest rate of return on his money”.  Unfortunately, my client required long-term care services fairly quickly after these products were purchased.  Since he had no accessible cash nor did he have long-term care insurance his wife had to surrender each of the annuities paying a significant penalty each time for each one to pay for his care.  What bothered me was that at the time of the initial investments it was known to the financial advisor that his client was suffering from dementia and he would need long-term care.  It was also known to him that based on their overall income they could not self finance his long-term care costs and he would ultimately need to access Title19/Medicaid to pay for his long-term care services.  The client incurred significant surrender costs and the spouse had to go through hoops to get the money from the investment company.  Perhaps in this case it would have been wiser for the client to keep the money in a local bank in CD’s or a money market account for easy access and to avoid the inevitable surrender penalties and difficulty the spouse had in accessing their money.  Unfortunately, the client was never given this option as a choice so we will never know what he would have done had he and his family had all of the information available to them prior to investing.

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