In this Elder Law Minute, Wes Coulson, O’Fallon Illinois Elder Law attorney, discusses another topic from the video series Married Couples and Medicaid and discusses IRAs and other retirement assets with regard to establishing Medicaid eligibility for someone who is married.
Married Couples and Medicaid: Dealing with IRAs and Other Retirement Assets
Transcript:
Hi, I’m Wes Coulson from Dent-Coulson Elder Law with offices in O’Fallon, Illinois and St. Louis, Missouri and this is your Elder Law Minute. I want to talk to you today about a subject that is very important with regard to establishing Medicaid eligibility for someone who is married and that is the question of how to deal with IRAs and other retirement assets.
The thing that you have to worry about with those, and why they require special attention, is that when you take money out of one of those assets, you have to pay tax on it. And when you’re trying to get assets down within the Medicaid asset limits, if you’re pulling a bunch of money out of an IRA you can start with a huge tax liability. Well, we don’t like huge tax liabilities, so we want to do something different.
One of the big things that we can do, and frankly this is something that you won’t be able to do without a good elder law attorney, is to convert those into income for the spouse who isn’t in the nursing home. The Medicaid rules very much favor that. You can take assets that you could not keep and convert them into income under circumstances in which the spouse who is not in the nursing home can keep all or most of that income. More importantly, that can be done under circumstances in which the IRA stays as an IRA, so that the money is being taken out gradually over time so you don’t get the tax hit all at once.
Maybe the most interestingly, is that you can even do that in Illinois and Missouri with an IRA or retirement asset of the person who is applying for Medicaid. You would think that with a $2,000 asset limit, they would have to cash those IRAs in. But, that’s not necessarily the case because we can use something that is known as the name on check rule that can make it still the IRA of the one in the nursing home, but considered to be income of the other spouse.
So, the moral of that story is if you are a married couple and one of you will be applying for Medicaid and you have any sort of significant retirement savings, come see us because the result that we’ll be able to get you is going to be a world better than it would be otherwise. Thanks.
For more information on planning for married couples, visit these articles:
- Will Transferring Assets Between Spouses Cause A Medicaid Transfer Penalty?
- What’s the Difference Between Estate Planning and Asset Preservation Planning?
- Married Couples and Medicaid: Understanding the Division of Assets Process
“Your Trusted Advisor on the Elder Care Journey”
Dent-Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Dent-Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (618) 632-7000 or (314) 567-9292, or Contact Us and we will get in touch as soon as possible.
