Turn Stagnant Assets into Tax-Advantaged Care Planning Solutions

by Alecia Barnette

Updated on September 21, 2023, at 12:21 PM

At the beginning of 2021, I went on a trip to Sedona, Arizona. Like everyone else, 2020 was a challenging year for me. In fact, it was one of the toughest years I’ve experienced in my lifetime. I lost my father, I was isolated from the rest of the world just like you, and I saw businesses struggle, specifically in care planning.

But with my trip came a new perspective. With the bad, sometimes comes the good. Sometimes in life, you can’t wait for things to happen. You must go and get them. Going forward, it’s all about regrouping, recouping, and reengaging.

For example, how many financial professionals have never had the critical care planning conversation? If you’re one of them, now is the time! I recently read an insightful article, “The Other Pandemic: What to Do About the Coming Alzheimer’s Crisis,” that dove into one of the scariest and most costly diseases known.

According to the article, there will be 60% more elderly population by 2030. That’s less than a decade away. Simply put, it’s time to talk about care planning before it’s too late. It’s time to address the “other pandemic” of Alzheimer’s. And the best care planning solutions are the ultimate hedge against this dreaded illness.

Annuities Can Become Tax-Advantaged LTC Solutions

So how do you address the concern? There are so many solutions available to help mitigate the risk of unplanned extended care. What if a solution is staring you right in the face? Right now, prospecting can still be difficult. But what if you could revisit your book of business and start the conversation with clients you already have?

There was a total of $2.8 trillion in annuities five years ago, and that number continues to grow. Meanwhile, 79% of annuity owners see it as a financial resource to avoid being a financial burden on children. Not to mention, 73% see it as an emergency fund in case of catastrophic illness or nursing home care.

So it’s safe to say that many of these annuity assets are just sitting around, waiting to be used. I like to call them “rainy-day funds” or “dead assets.”

Why not help give new life to these old contracts? With the Pension Protection Act, there are products out there that’ll give your clients triple tax efficiencies. Yep, triple the tax advantages. Just by repositioning these non-qualified annuities, they can provide these three efficiencies:

  1. Tax-free transfer.
  2. Tax deferrals.
  3. Tax-free distributions for qualified long-term care (LTC) expenses.

What Does This Mean for Clients?

These tax efficiencies, which everyone loves, can take your clients’ money and possibly double or triple it; or even provide lifetime benefits for LTC (depending on the carrier). Think about what this could mean for your older clients! Stand-alone LTC could be a good option, but it can be pretty expensive, and underwriting becomes more difficult the more a client ages.

With this option, you get tax-free LTC for qualifying LTC expenses and additional leverage on day one. If your client doesn’t use it, the remainder annuity value goes to their beneficiary. It’s an easy conversation to have with clients who don’t have a plan in place.

Most clients don’t realize that by not putting a plan in place, their money is their plan by default. This route can be a great way to go back to your book of business, help your clients mitigate against the extended care risks, and make some additional revenue.

The cost is minimal to engage with your existing book of business. Make time to reconnect with your clients. Start having the care planning conversation. Let us in the FIG Care Planning Division help you navigate these uncharted waters. Reach out today and we can help you reconnect with your book of business!

financial independence group logo

You May Also Like