When developing a Veterans Aid & Attendance plan involving a single premium immediate annuity, various factors need to be taken into consideration above and beyond the financial figures.
1. How long is the claimant anticipated to be on VA benefits?
The factors that play an important role in answering this question include: the claimant's current age, medical condition and prognosis, level of care, net worth, monthly income, cost of care, and family history of similar care.
Note: For residents of an assisted living facility, 2009 statistics1 reflect that the average age of residents was 86.9 years, gender ration was 74% female and 26% male, the typical resident needed assistance with two ADLs, and the average length of stay was 28.3 months - with 59% moving into a nursing home, 33% passing away, and 8% moving to another location.
2. What if the claimant insists on maintaining control of assets?
If a claimant insists on maintaining control of assets - no gifting, the VA plan would typically include a level-pay single premium immediate annuity and possibly one, or more, balloon-style single premium immediate annuities. The single premium immediate annuities would be structured over the full life expectancy of the claimant, using the shorter of the VA life expectancy table or the Medicaid life expectancy table.
3. What if the claimant insists on gifting assets?
If the claimant insists on gifting assets, the VA plan is likely to include a 60-month level-pay single premium immediate annuity which is designed to zero out the claimant's IVAP. Any excess net worth would be transferred directly to the children, assuming they agreed to hold the gift or gifts in a family trust. Once inside the family trust, the funds would be held in a tax-deferred annuity, with a guaranteed rate of return, and surrender charge period of no more than two years. Upon maturity, the tax-deferred annuity could be continued, if necessary, without any negative tax consequences. Finally, if the claimant transitions into a nursing home near the end of the 60-month term, and does not have the ability to privately pay the nursing home, the children, as co-trustees/co-grantors of the trust, would take care of any possible shortfall.
1 This information was retrieved from www.assistedlivingfacilitiescalifornia.com/assisted_stats.cfm