Free "Protect Your Estate" Events

[Charpress]

Hi, been AWOL for a while. As usual, I'm back because this site is the best source for insurance info. Anyway...

An estate planning lawyer in Louisiana has put together a system for convincing people through his seminars that they need to buy his "Medicaid Eligible Trust" and "Avoid Nursing Home Poverty." He charges $5k for this trust -or $4k "If you sign up tonight." I've been watching him expand this over the last couple of years. He now has associated lawyers in many states putting on these dog and pony shows and is apparently making a bundle -a sort of franchise arrangement i guess.

When he first started doing seminars locally, the hook was to pivot to annuity sales -which is why I have this posted here. I think we have all done that to some extent. Start out talking about LTCI and then bemoan how expensive it is and start talking about how income riders are better, and so on. I suspect he still has an angle here to get into insurance product sales.

But now it is more about making a quick dollar putting together a trust. Frankly what he is doing pisses me off. It is EXTREMELY misleading to suggest to people that a welfare program (Medicaid) is the answer to their estate planning and long term care needs. First, most of the people (90%) who attend these free-meal seminars are NEVER going to qualify for Medicaid. I'm sure he mails to the same financially well-off people we all mail to. Second, if by chance they do qualify, they will be very unhappy about the level of care that Medicaid provides.

So, I am putting together something to counter this "Avoid losing your life savings to nursing home costs" scare campaign.

Before discussing how I plan to counter this, I was curious as to how many of you have run into this or anything similar where you are. I know he is operating in at least 6 states now. My take on this is that he is relying on the 5 year look back to give him time to milk this before people realize they paid for something that will not work.

 

[inreverse]

Very similar to CLA USA out of Texas

 

[Charpress]

It is similar except for the lawyer angle. CLA USA appears to be the usual annuity shop but with multi-state operations.

My objection to the lawyer shop is that they are using Medicaid and Medicaid scare tactics to convince people they need to buy a trust to "Avoid nursing home poverty" -as they say in their newspaper ads. They do their seminars at expensive steak houses, so you know there are more than a few angles here. From my own experience, I know right off the bat that 90% of the people going to these seminars are NEVER going to qualify for Medicaid despite spending a bundle on a worthless trust.

As profitable as selling $5k trusts (or "$4k if you sign up tonight") could be, I really doubt that large newspaper ads and expensive restaurants are worth the relatively small amounts realized. I suspect other thing are going on. But in any event, the worst possible thing anyone can do is try and become Medicaid eligible. I'm very familiar with Medicaid and as a lawyer have had occasion to sue them. You don't want to deal with them if you don't have to any more than you would welcome an IRS audit.

Anyway -apparently this has not caught on much in other areas of the country since nobody has responded that they have this going on where they are. But they are expanding this very quickly, so stay tuned for it coming up where you are. If it does, I have a slam-dunk way of shooting basketball-sized holes in the BS they are feeding people about Medicaid and how it is the answer to end of life problems.

I'm going to cash in on the advertising these guys are doing by doing a string of seminars on the 13 reasons you don't want to ever be Medicaid eligible.

If this comes up with any of you, just let me know and I'll be happy to share the ways you can point out the tremendous disservice these guys are doing to families who have legitimate worries about how to get care for themselves or family members.

 

[dahonored1]

Prudential is starting to do seminars like this. Their angle is having a LTC rider and establishing a bypass trust. Any ideas what I should say to them next time?

 

[Golfnut2112]

Hi, been AWOL for a while. As usual, I'm back because this site is the best source for insurance info. Anyway...

An estate planning lawyer in Louisiana has put together a system for convincing people through his seminars that they need to buy his "Medicaid Eligible Trust" and "Avoid Nursing Home Poverty." He charges $5k for this trust -or $4k "If you sign up tonight." I've been watching him expand this over the last couple of years. He now has associated lawyers in many states putting on these dog and pony shows and is apparently making a bundle -a sort of franchise arrangement i guess.

When he first started doing seminars locally, the hook was to pivot to annuity sales -which is why I have this posted here. think we have all done that to some extent. Start out talking about LTCI and then bemoan how expensive it is and start talking about how income riders are better, and so on. I suspect he still has an angle here to get into insurance product sales.

But now it is more about making a quick dollar putting together a trust. Frankly what he is doing pisses me off. It is EXTREMELY misleading to suggest to people that a welfare program (Medicaid) is the answer to their estate planning and long term care needs. First, most of the people (90%) who attend these free-meal seminars are NEVER going to qualify for Medicaid. I'm sure he mails to the same financially well-off people we all mail to. Second, if by chance they do qualify, they will be very unhappy about the level of care that Medicaid provides.

So, I am putting together something to counter this "Avoid losing your life savings to nursing home costs" scare campaign.

Before discussing how I plan to counter this, I was curious as to how many of you have run into this or anything similar where you are. I know he is operating in at least 6 states now. My take on this is that he is relying on the 5 year look back to give him time to milk this before people realize they paid for something that will not work.

What is he doing is completely legal and ethical. Yes he is using the 5 year look back.
Why are you so mad about this? Would you rather pay a fortune for LTC insurance only to have your premiums increase ( and believe me I have sold my share that has). You should maybe get to know the guy and maybe form an alliance. I know two attorneys who I have been working with for years and they have referred me a lot of business in return

 

[Charpress]

What is he doing is completely legal and ethical. Yes he is using the 5 year look back.

Medicaid is going broke and recently asked the Congressional Budget Office what they should do to stop the bleeding. The first suggestion the CBO had? Change the look-back to 10 years. That is one of the 13 reasons nobody should rely on a welfare program (Medicaid) to be part of their estate planning.

Back when the look-back was 3 years I warned clients that it would change and when it did the change would be retroactive. Sure enough, that is what happened.

Their seminars also claim that their Medicaid trust "Keeps the government out of your estate settlement." (to quote one of their newspaper ad bullet points). Just take a look at a 12-page Medicaid application that requires you to disclose all assets, income, trusts for the person needing care, the person's spouse and the person's parents. Question 16 asks you about assets and requires supporting documents and has 13 sub-parts. If you somehow manage to get into the nursing home on Medicaid, you have to file renewal applications or get bumped off Medicaid. After you die your estate may have to repay Medicaid for all nursing home expenses -so heirs will have fun with that. Any of this sound like you are avoiding government interference?

I'm not advocating LTCI necessarily. I personally show people LTCI and then compare the various annuity/income rider choices. It is usually a no-brainer.

Again, and I hope this is clear: my objection is that Medicaid is a welfare program that was never intended to be a substitute for proper planning. People are led to believe this is the answer to save them from "nursing home poverty". Medicaid will find every way they can to make sure people do not qualify. Hell, income alone will disqualify most people that go to these seminars -and there is no way to hide SS and pension income. You also can't put IRA or 401(k) money in a trust without it being considered a full and taxable distribution.

And then there is the issue that many of the better nursing homes don't accept Medicaid. That is a fun thing to find out down the road when the 70% chance that you will need long-term care comes true.

If all the downside of Medicaid was fully explained, nobody would consider going that route -but it isn't. Yeah, I think that is unethical.

 

[Golfnut2112]

I do agree with you about proper planning with insurance. The problem is most people cannot do that because of the high cost. You may want to contact an estate attorney so he can explain the laws concerning Medicaid and nursing home planning especially the income laws. I also agree with you about better nursing homes being only private pay, in that case if they prefer to stay there they can start paying the cost with qualified funds that were not put in the trust then dissolve the trust if the want to stay there.

 

[Charpress]

You may want to contact an estate attorney so he can explain the laws concerning Medicaid and nursing home planning especially the income laws.

I am familiar with Medicaid rules and, as a lawyer, have had occasion to formally contest unfair denials of coverage. I would rather deal with the IRS any day than with the people at Medicaid.

One of my strong objections to using Medicaid as a perceived means to get free care is that nobody going to these seminars has a clue just how unpleasant a chore they will have when the look-back period is over and they try to apply for Medicaid and find out at that time whether their trust is valid. Question 16 on the Medicaid app requires that the applicant disclose details on any trust that they, their spouse, or their parents have created or in which they have any interest. That is where the fun begins -when they have to submit a copy of their trust for review. And keep in mind also that the CBO has already recommended that Medicaid make the look-back ten years to avoid insolvency. Politically, that will be an easy call. Either way, 5-10 years is a nice time cushion for the sellers of these trusts.

Keep in mind I have no problem with Medicaid friendly trusts and with special needs trusts. I am referring specifically to the particular trust being sold in these particular seminars that promise that it is a cure for estate planning issues. I have read one and I frankly don't see it flying with the good folks at Medicaid.

 

[scagnt83]

Hey Steve. I dont have any direct experience with these seminars. But I did recently notice that a local attorney just put up a HUGE lcd sign outside of his office that is promoting estate planning. One of the things it mentions are "Medicaid Trusts". Not sure what form or fashion they are doing.

If you are doing seminars, I think it would make A LOT of sense to team up with an estate attorney (I know that you are an attorney, but not sure if you wear dual hats when doing stuff like that) and even a CPA as well. All 3 do a combo presentation... which would not just provide more info and authority... but also cut your costs by 2/3. I think that having 3 different types of financial professionals would also bring a larger response to the invite.



But I agree that Medicaid is not the way for someone with assets to plan for LTCI. People who cry "high premiums" are not looking at the numbers and the facts. People who have personally experienced it to its full extent... and have assets worth protecting... see the value in it and want it.


These days there are multiple ways to help reduce exposure to LTC costs. Traditional LTCI, Hybrid LTCI, FIA Riders that double income, plus, Life Insurance Riders that allow you to tap into DB. Honestly, it makes a lot of sense to combine 3 or 4 of those options to make a multiple layer "safety net" of LTC protection. That would be a much more usefell seminar for people to attend. Focus on protecting your hard earned money and not getting stuck in a Medicaid facility. jmo

 

[Golfnut2112]

I totally agree with what everyone is saying. My average client is over 65 with around 100,000 to 300,000 in cash and investments and some cannot afford traditional planning. I sold a lot of the American Express LTC policies in the early to mid 90's and have to say they worked well. Today I use money guard with people who do not need the money, but I also work with two attorney's which has also worked out. In short if they can't afford traditional planning I refer them out.