Liquidating assets for nursing home
Do I have to withdraw the funds by a certain age or date? A follow-up conversation revealed your plan is actually a Roth 401(k), and while the contribution schedule increases annually automatically, you can jump ahead to the maximum if you wish.Generally, you can avoid taking required distributions after age 70-1/2 if you are still working for the employer sponsoring your Roth 401(k), and if you leave that job you could explore rolling it into a Roth IRA, which wouldn't be subject to required distributions.Some examples include household goods and personal effects, one automobile (depending upon state laws and the marital status of the applicant), certain pre-paid funeral plans, and property used for self-support, such as income-producing property or property used in a business.If all of the conditions contained in state and federal laws are met, these assets do not have to be liquidated to pay for the Medicaid applicant’s long term care.There is generally a five-year look-back period for Medicaid, meaning that asset transfers within the five previous years of an application can be subject to penalties.
Transfers to a spouse are not penalized by Medicaid because assets held in the name of either spouse are included when determining an applicant's eligibility.
In other words, the trust or annuity must be to set up to spend the assets or money for the spouse's needs in a way that it will run out by the time the spouse dies.
This is particularly applicable when an annuity is purchased by the applicant’s spouse to pay out in a series of monthly payments to that spouse.
You should be aware that certain advance planning techniques for Medicaid are somewhat controversial, with critics claiming that wealthy individuals use them to divert assets and leave the nursing home bills to the government.
Can the healthy spouse keep the jointly owned house or will it have to be sold when nursing home costs for the ill spouse require money? There are some ways for spouses to protect some assets before this happens, and that is generally referred to as Medicaid planning, or restructuring assets in an effort to maintain some financial stability for the healthy spouse.