Can IRAs and other retirement funds be transferred into an Irrevocable Medicaid Asset Protection Trust? Yes, but you must first withdraw those funds and pay the income taxes due on them, then the balance of those funds may be transferred to the trust. While at first this may seem undesirable, remember that all funds—even those in a retirement fund—will have to be used up to pay for nursing home costs if they remain outside the trust. Since someone eventually will have to pay the income taxes on those funds—either you if you withdraw them during your lifetime or your heirs when they inherit those funds—it may be best to withdraw some of those funds now since we are subject to the lowest income tax rates in decades. This should all be discussed with a knowledgeable Elderlaw attorney.
-Attorney Jack N. Alpern
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