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Lawyer warns elderly against bad financial planning

April 18, 2000|By SCOTT BUTKI

Hagerstown Attorney Michael G. Day said senior citizens should be cautious about accepting advice from some financial planners urging them to try to predict the future.

Some financial planners are encouraging senior citizens to buy annuities to prepare for the possibility of a family member entering a nursing home, Day said.

The problem is that there is no way for senior citizens to predict which family member will get ill or die first or whether they will need a nursing home or more expensive care, he said.

Guessing wrong can have bad financial consequences and worsen problems because they will have purchased unneeded annuities, he said.

Just as seniors shouldn't give property to their children until they are sure they no longer need it themselves, they should not try to predict the future when it comes to the health of a spouse, he said.

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Day said he is not aware of any local financial planners making such suggestions but on at least one occasion in the last year a seminar giving that advice was held in the region. He said he did not know the names of those making these suggestions.

The advice is not itself illegal or a scam, he said, because if the seniors guess correctly, the suggestions could make sense.

More often they might guess wrong and find they have purchased unneeded annuities, he said.

"If the wrong spouse is institutionalized, it can be horrific," he said. "It really limits their options."

Seniors who want to try to plan for the future should see an attorney that specializes in elder law, such as himself, he said.

Financial planner Andrew Serafini of Serafini Financial Systems of Hagerstown says he would view suggestions to buy such annuities with much skepticism.

"We are very leery of any of this," he said.

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