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Withdrawal of IRA funds for payment to memory unit?

I have legal guardianship of my aunt, who upon discharge from hospital with diagnosis of lung cancer and dementia was placed in a memory care unit, with a life expectancy of 4-6 months. She is thriving, no evidence of lung cancer and has only 7 months left of her savings, can I withdraw her IRA funds to continue to pay for her care?
Status: Open    Mar 21, 2016 - 09:06 AM

Elder Law > Guardianship

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Expert Answers

Mar 23, 2016 - 12:18 PM

You can definitely withdraw from her IRA to provide for her care. I would suggest contacting an elder law attorney to assist you with any payments of medical expenses to ensure the appropriate steps are taken in the event your aunt will need Medicaid to pay for her care in the future.

In addition, an elder law attorney should advise you to inform an accountant of the IRA withdrawals. Typically, liquidating an IRA is a taxable event. However if the withdrawal is being made for the purpose of paying your aunt's medical expenses, your aunt should be able to receive a deduction from the taxes owed. You should work closely with her/your accountant about how to take advantage of this process.

Mar 24, 2016 - 08:23 AM

If you have legal authority over your aunt's financial assets, then you can certainly withdraw these funds for her care. It is prudent to withdraw IRA funds only after other funds are exhausted, as there may be additional income tax consequences related to the IRA withdrawal. You may want to consult with a tax adviser prior to making any such withdrawals.

Mar 24, 2016 - 08:27 AM

If your aunt has a 4-6 months life expectancy, look into a Hospice arrangement. If she qualifies, she will not have to draw down her IRA. Additionally, have her review the IRA's beneficiary designations along with her will and other documents.
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