Over the past several months our office has been receiving an increasing number of clients calling with question about various financial and insurance products.  Most of these questions have been related to how certain products work and especially as to how these products may or may not fit into the clients overall plan to avoid taxes, reduce probate cost and protect their assets from being lost to the cost of aging, including the cost of a nursing home stay, assisted living or home health care.

Listed below are a couple examples of questions received and answers that hopefully will help clear up certain misunderstandings. ……

Question: Is an annuity product protected from being lost to the cost of a nursing home stay if the annuity has waiver of surrender charges?

Answer: No.  The waiver of surrender charges in the event of a nursing home stay is just that, a waiver of the surrender charges should you need to cash in your annuity to help pay for the cost of your nursing home stay.

Please note:  The only annuities that are protected against being lost to a “nursing home spend down” are those being used in conjunction with other legal documents, such as a trust.  If anyone tells you that they have a stand alone financial product, such as an annuity, that will gives you nursing home protection it is not true.  If you have any specific questions in this regard, please call Sandy Workman at our office for a more detailed explanation.

Question: I was recently approached about a single premium whole life insurance policy and was told the death benefits would not be taxable when I die.  Is his correct?

Answer: Most life insurance death proceeds are not subject to income tax or Ohio death tax if paid to a named beneficiary.  However, if you are the owner of the life insurance policy, the death proceeds are included in your gross estate for federal estate taxes.  These death proceeds may or may not be taxable depending on the size of your estate or when you die.  With larger estates, these taxes can usually be avoided by using a certain type of trusts.

Our plan is to continue to provide answers to frequently asked questions as part of the blog postings.  Should you have any questions at all, please contact us at 1-800-798-5297.