Annuity Advice
Some say that Florida is
the scam capitol of the
country. If that’s true, then
the annuity may well be the
state’s number one tourist
attraction.
Annuities can be a use-
ful tool for some people,
under some conditions. Un-
fortunately, unscrupulous
financial planners have Joseph S. Karp,
been known to promote C.E.L.A.
annuities as suitable financial vehi-
cles for people for whom they are
anything but. I have had people come
in to see me, in their 70s and 80s, who
have purchased annuities after being
sold a bill of goods about its bene-
fits. When they need the money for
living expenses or emergencies, they
find the fine print includes astronom-
ical penalties.
One of the “hooks” used to reel
in seniors has been the promise that
buying an annuity, i.e., converting
assets into income, will make them
automatically eligible for Medicaid
benefits. Annuities may have a place
in Medicaid planning and in estate
planning in general, but by no means
is purchasing one the key to the
Medicaid castle. In fact, the enact-
ment of the Deficit Reduction Act has
made the use of annuities for Medi-
caid planning purposes in Florida even
more restrictive and complex than
ever before.
Another type of questionable an-
nuity, the Equity Indexed Annuity,
has recently grabbed the critical eye
of the Florida Department of Finan-
cial Services. This annuity is often
touted as an instrument that allows
s en i or s to take adv antage of an
underlying market index—
without the risk. Not only
is there a catch—there are
many possible catches. The
return on investment can
fall short of the underly-
ing index, even if the in-
dex performs well. Hefty
surrender charges, admin-
istrative fees and other
costs are often buried in
the fine print. And because
the Equity Indexed Annuity is not con-
sidered a security per se, it does not
have to be registered with the SEC,
and the would-be purchaser is not
required to receive a prospectus. The
situation is ripe for abuse.
If you think an annuity may have
a role to play in your financial plan,
your estate plan, or your plan for
shouldering long-term care costs, you
should absolutely not take the plunge
without first consulting with your cer-
tified elder law attorney. It’s also a
good idea to talk with your CPA.
Caveat emptor!
★ Listen to Joe Karp with
★
Anita Finley on Saturday,
October 11 from 7:30-8:00 AM
on WSBR 740AM and on the
Internet at www.wsbrradio.com.
★Joseph S. Karp is a nationally certified
★
and Florida Bar-certified elder law attorney
(C.E.L.A.) specializing in the practice of Trusts,
Estates and Elder Law. His offices are locat-
ed at 2500 Quantum Lakes Drive, Boynton
Beach; 2875 PGA Blvd., Palm Beach Gar-
dens; and 1100 SW St. Lucie W. Blvd., Port
St. Lucie. Call him at 561-752-4550 (Boyn-
ton); 561-625-1100 (Palm Beach Gardens);
or 772-343-8411 (Port St. Lucie). Toll-free
from anywhere: 800-893-9911. E-mail: KLF@
Karplaw.com. or website www.karplaw.com