Greetings all, I have a somewhat unusual (at least for me) scenario I'm dealing with, and although it's not really mustache related I'm hoping someone here has some experience with it.
My girlfriend's dad is currently very ill and will likely be in a nursing home for the rest of his life. This could be 3 months, or 5 years, it's not really cut and dry. Because this will be long term care and he's over 65, as far as I know Medicaid is really the only sensible option They have around $230k, most of which is in the mom's 401k at work. For simplicity's sake we'll just discuss that money.
We were referred to a financial solutions company that specializes in asset protection when qualifying for Medicaid. Basically how I understand it is all of their assets are split down the middle, and half goes to each spouse as far as Medicaid is concerned. The dad has to have <$2000 in assets to qualify for Medicaid (income is not an issue as he is below the limit). According to them, because most of the money is in the mom's retirement accounts, they can "shield" his half by putting it in an annuity that pays out to the mom. That removes the money as an asset, and turns it into income for her which isn't looked at by Medicaid. They also prepare a new will, work on retitling the house in her name only, and have lawyers on staff to draw up any necessary legal documents.
The fee for this service is $10k and then $20/month. The annuities company they use is Jackson National, but they said if we want to use someone else we can. We need to clear the annuity with them beforehand to make sure it works with this strategy, but they said they have no problem with that. After he gets approved for Medicaid, she can go back to investing in her 401k as usual, so the annuity is a one time chunk of money, not something she'll continue paying in to.
Initially all of my "THIS IS A SCAM" alerts went off, but after talking with them the strategy seems sound. $10k is a good chunk of change, but I'm not sure I want to take on the liability of handling it all myself, so I'm going to have them go with the company for management. Where I'm hoping to save them some money is on the annuity selection. I see Vanguard has some annuities, so I'm going to follow up with the company to see which ones qualify.
Does anyone have any advice or insight into this sort of situation? Have you dealt with something like this before? I'd appreciate any input you can give me.