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Is a Change of Beneficiary on an IRA Considered a Gift by Medicaid?
Both of my elderly parents are alive, and my father just changed the beneficiary of his IRA account from his wife to his children. Her name is not on the account because she has a separate IRA account. If either parent needs Medicaid in the next five years, would the change of beneficiaries be considered a gift and subject to penalty by Medicaid?
No, the change of beneficiaries is not a gift and is not subject to penalty because your father still owns the IRA and can do what he wants with it. Depending on the state, the IRA may still be an asset that has to be spent down to qualify for Medicaid. Some states, however, do not count IRAs as an asset, especially if the spouse of a nursing home resident owns the IRA. And if one spouse moves to a nursing home, the healthy spouse can keep up to $120,000 of countable assets, depending on the state. If you are thinking about Medicaid, we strongly recommend you consult with an elder law attorney in your state. To find one near you, go here: https://www.elderlawanswers.com/elder-law-attorneys. To see how your state treats IRAs for Medicaid purposes, click on "Key Medicaid Information" on the page for your state.
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