We know that in the long-term care market, many clients fail to do any real planning until the need for care presents itself. Fortunately, these same clients often have assets, typically annuity assets, “earmarked” as the source of funds the intend to use should they need care. That approach presents some challenges, however. Primarily, the LIFO tax treatment of annuities makes it necessary to take a much larger gross distribution to net the amount they need to pay for care. Fortunately, a recent entrant in the market offers an elegant leverage opportunity that eliminates the taxes completely when a client goes on claim. We’re calling it the LTC Leveraged Ticket, and it accomplishes the following:
- Eliminates the taxes on any gains by converting taxable distributions from the annuity to tax-free Long-Term Care payments
- Utilizes indemnity benefits, eliminating the need to track expenses, furnish receipts and the like that comes with reimbursement style LTC benefits
- Offers a modest amount of leverage, even if the client goes on claim in year 1
- Has zero, literally zero, underwriting.
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The contents of this document should not be considered as tax or legal advice. Any information or guidance provided is solely for educational or informational purposes and should not be relied upon as a substitute for professional advice. It is always recommended to consult with a licensed financial or legal advisor for specific guidance related to your individual situation.
