Friday, June 12, 2009

Buyer Beware

A colleague recently handed me a flyer she had received and asked if I knew anything about the service. Here are some of the claims made in the flyer:

Important Elder Law Update
Congress has passed legislation that standardizes entitlement provisions for persons 60 and over. These laws provide the following benefits:

Seniors may apply to completely avoid all probate and estate taxes
I don't even know what that means. The way it reads, it implies that there are probate taxes. There are not. If they mean that you can "apply" to avoid probate, they are wrong. You can't "apply" to avoid probate. You can plan to avoid probate.

In 2009, unless your estate is over 3 million dollars, there won't be any estate taxes anyway. Again, there is no "application" to complete to avoid estate taxes. If you have to pay estate taxes, you may be able to minimize the tax liability through proper planning.

Exempt assets from collection by government or nursing home if ill (with no need for nursing home insurance!)
I assume they are talking about paying for nursing home care. The government does not collect assets. Neither will the nursing home.

If you do not have long term care insurance and you need nursing home care, you can either pay privately for your care, or you can apply for Medicaid assistance. If you apply for Medicaid assistance, certain assets, like a homestead up to a certain value or one vehicle of any value are considered "exempt" (This is the rule in Texas. Medicaid rules vary from state to state). If the state pays for your nursing home care, they do have the right to recover expenses from your estate, this is the Medicaid estate recovery program. With proper planning, it may be possible to avoid estate recovery. Even so, the state isn't going to take your assets. They will file a claim against your probate estate, just like any other creditor.

The key is proper planning, done by qualified professionals. Many elder law attorneys are well versed in Medicaid laws, as well as estate tax planning. You would probably not let an electrician work on your plumbing system, so why would you let a someone with no credentials or questionable credentials give you tax planning or Medicaid planning advice?

I would also be cautious getting advice from someone whose main business appears to be selling financial products. Sometimes annuities are a perfectly fine financial product, but if an annuity won't mature until you're 114 years old (I have seen this, really), then it may not be the best product for you.

When I went to the website listed on the flyer, annuities figured prominently, as well as other financial products. There was no information on the "advisors", so there was no way to tell if they were Certified Financial Planners or if they held any other certification or designation.

I just don't think you can be too cautious when it comes to doing research on the folks who are going to help you plan for your retirement. If you need an elder law attorney, you can find one at If you need a financial planner, you can find one at Another resource for a financial planner is the National Association of Personal Financial Planners.

It may be hard spending a little money for the right advice, but in the long run it could save you a bundle.

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