A Solution When it’s Too Late to Plan – The Lopes Annuity


What options does the individual have who already needs care? What if he or she has dementia or a chronic illness? What if they are already in the nursing home? Now…There is a solution!


On October 2nd, 2012, in the US Court of Appeals for the 2nd Circuit, the Lopes vs. the Department of Social Services case was decided. This long awaited decision now provides a fantastic opportunity to individuals who are currently in a nursing home, going through a spend-down of assets. In addition, I have had the privilege of getting to know the attorney, Brendan Daly, who won the Lopes case.


Since the Lopes decision, I was able to assist a client who found herself in need of help. Meet John and Sarah of Hamden, CT. John, age 78, was recently admitted into the nursing home at a cost of $12,000 per month. Together they own a home and have about $358,000 in savings and investments. Without planning, John’s care costs will wipe out their assets in just a few years. The plan we put in place to protect Sarah, age 70, follows:  Sarah took $78,000 to pay off a home equity loan on their home. This left her with $280,000. We then set aside the $115,000 community spouse allowance, leaving her with $165,000. We purchased an actuarially sound annuity with these dollars, meeting all the requirements set forth in the Lopes victory.  Sarah now receives $4,600 per month and will continue to for a period of 3 years (36 payments).  John’s application for Title 19 assistance was approved. Sarah keeps these payments and her lifestyle and her peace of mind are secured.


This is just one example (and there will be many many more) of how this court victory presents an opportunity to use actuarially sound annuities. The critical aspect is making sure that the annuity has specific language (which most do not) and that the beneficiary is correctly established. Not all insurance professionals know how to set up these annuities.  Establishing the contract incorrectly or with improper timing could result in significant problems that cannot be easily reversed, if at all.


If you or a loved one find yourself in a similar situation and in need of a solution, please give our office a call and I will be happy to explain how we can help.