QUESTION
can government take an ira in case of an unexpected nursing home stay
Asked on Dec 11th, 2014 on Elder Law - Missouri
More details to this question:
My Father died leaving his 401k retirement behind. My mom rolled it over into an ira. She is wanting to take her money out and split it between her kids and grandkids. She is worried about an unexpected nursing home stay and wants to be sure my father's retirement goes to her kids. My mother is in fairly decent shape and we expect her to live a much longer life. We also heard that the government can search her bank records as well as her kids to retrieve money after 5 to 7 years.
1 ANSWER
nathan forck
The government cannot "take" the IRA or the investment account. However, your mother will not be eligible for Medicaid benefits until she has less than $1000. The question is, what is the correct way to get to less than $1000? Any transfers of assets for less than fair market value, a.k.a. gifts, will be subject to a five-year look back period. A penalty will then be assessed against your mothers Medicaid eligibility. In other words, she will be in eligible for a number of months based on the amount that you transferred for less than fair market value. The greater the amount that was transferred, the longer the penalty period. However, as you referenced, the state cannot penalize transfers that it occurred prior to five years before applying for Medicaid vendor benefits.
That is a basic description of what your up against. However, the best solution for your mom will be based on a number of factors. I would suggest that you speak with an elder law attorney in your area to find out the best options for your mom. Many, like myself, offer free consultations. Best of luck to you and your family.
Answered on Dec 11th, 2014 at 2:27 PM