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Senior care for the financially unaware

Dr. Don TaylorDear Dr. Don,
My parents have sold their California home of 40-some years, and relocated to their birthplace. My father opened an annuity account with an investment firm with the proceeds from the sale of the house. Because his health has declined, he was constantly worrying about losing his money, or that the agent or firm was making money off his account.

I am a dummy when it comes to this type of money management, so to have peace of mind for both my father and myself, I withdrew the entire money. The checks are made in my parents' name, with the word "trustee" after each name. Also, it has their name and the words "revocable trust." One check is dated May 12, 2004, and the other Aug. 27, 2004.

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Could you please advise me on where I can put these checks? My mother is bedridden from a second stroke. My father finds it difficult adjusting to the relocation because he is living in an apartment. He wants to buy a house, but it is hard finding a handicapped-accessible bathroom. I do not know whether building a house for them is worthwhile. This leaves my father in a depression, and I find myself going to pieces because of the care-giving demands of my parents, and my immediate household of six.

Your immediate reply is requested and appreciated. Thank you for your time and attention to my urgent request.

-- Eileen Estate

Dear Eileen,
Annuities typically have large surrender charges in the first six to eight years of ownership, so cashing out can be an expensive proposition. Lifetime annuities provide the peace of mind that you won't outlive your income. Your father's health taking a turn for the worse may have caused him to change his perspective on buying an annuity.

Establishing a revocable living trust is often used as an estate-planning tactic to allow assets held in the trust to avoid probate. If the annuities were held in a revocable trust, then it would be proper for the checks to reflect that the monies came from the trust. Whether it was necessary or proper to hold the annuities in trust is another matter, dependent on the type of annuity and its provisions.

I don't know enough about your parent's physical or financial health to reassure you that building a home is the right answer. From what you've told me, it doesn't sound like a very good idea. An assisted-living community sounds closer to the mark, but there may not be one in their area.

You need more help than I can give you in this letter.

Your father's attorney should review the legal implications of taking the money out of the trust and work with him on developing an estate plan. A fee-based financial planner can work with him to discuss how the annuity proceeds should be invested after developing a budget and discussing his financial needs. The National Association of Personal Financial Advisors can help you find a fee-based financial planner in your area. Good luck.

-- Posted: Oct. 29, 2004




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