The U.S. Court of Appeals for the Second Circuit upholds a district court ruling that Connecticut cannot treat the income stream from an annuity as an available asset for the purposes of Medicaid eligibility. Lopes v. Dept. of Social Services (2nd Cir., No. 10-3741-cv, Oct. 2, 2012). After John Lopes moved to a nursing home, his wife, Amelia, purchased an annuity. She received a letter from the annuity company stating that no part of the annuity was assignable, including periodic payments. Mr. Lopes applied for Medicaid. The state identified a potential buyer of the annuity's income stream and directed Mrs. Lopes to…
Many elder law attorneys advise clients to consider using annuities as a means to protect assets for the community spouse when their spouse is in the nursing home. An important decision was reached that may benefit planners and their elder law clients in achieving asset protection goals. Reversing a district court, a U.S. court of appeals holds that an annuity is an unavailable resource even if it is purchased in addition to the community spouse resource allowance, and that there is no transfer penalty for the couple’s purchase of the annuity prior to a determination of Medicaid eligibility. Morris v….
One solution: Donating the principal to a nonprofit in the form of a "charitable gift annuity" in exchange for lifetime fixed annuity payments. Remember the good old days, you know, when you could invest in a certificate of deposit (CD) and the bank would actually pay you something called “interest” on your deposit? No, really, I kid you not. Obviously, I am being a bit factitious, but you get the point. It is hard enough to make money these days, let alone accumulate wealth. Let’s say you are retired and are looking for a place to put your money to…
A single premium immediate annuity (SPIA) is a contract with an insurance company where the non-nursing home spouse pays a sum of money to an insurance company. Consequently, the insurance company sends a monthly check to the non-nursing home spouse for a certain time period or for the rest of their life. In Maryland, and some states, the purchase of a SPIA is not considered to be a transfer (gift) for purposes of Medicaid eligibility, because it is an income stream. Therefore, it transfers countable assets into a non-countable assets. In order for the annuity purchase not to be considered…
The decision applies to annuities, which are irrevocable and nontransferable. In Lopes v. Starkowski [No. 3:lO-CV-307 (JCH)], the United Stated District Court in Connecticut ruled that the income stream from an unassignable immediate annuity is not an asset for Medicaid eligibility. As precedent, it cites a Third Circuit opinion —James v. Richman [547 F.3d 214 (3 Cir. 2008)]–which held that under the Supplemental Security Income program, “an unassignable annuity’s income stream would be treated as income and not as an asset.” But the new District Court decision went further, by stating that “it would be incongruent with the principles of…
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