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My husband was diagnosed with Stage 4 cancer. Got approved

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My husband was diagnosed with...
My husband was diagnosed with Stage 4 cancer. Got approved for S.s. D in less than a month which is unheard of. Been trying to get insurance but are over income limits. OK... Can I legally withdraw our 401 and cash accounts? Or will someone come back on us and want to know where the money went?????? We don't have alot but I don't what the law is about withdrawing your own funds. I know I can gift up to $10,000 to a person but am I legally entitled to take funds out??? My husband and me both are trying to figure something out. Thanks.
Submitted: 5 years ago.Category: Estate Law
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Answered in 11 minutes by:
5/1/2012
Estate Lawyer: John Elder, Estate & Elder Law replied 5 years ago
John Elder
John Elder, Estate & Elder Law
Category: Estate Law
Satisfied Customers: 4,632
Experience: Over 14 years experience in Medicaid, Estates, Trust.
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Thank you for trusting Just Answer. I will answer as clearly as possible. I do ask for you Accept my answer so I am paid when we are done.

Unfortunately while you can withdrawal the funds, you cannot transfer those funds to children or other people without causing a Medicaid penalty. You cannot even transfer $10,000 without causing a Medicaid penalty.

The $10,000 that you are talking about are allowable gifts for federal gift tax purposes. You can transfer now up to $13,000 without reporting the gift under federal gift tax. The federal gift tax exemption is now $5 million so no gifts under $5 million will be taxed with federal gift tax. However, gift tax is not the issue. Even though the gifts are not taxed under federal gift tax the do cause a Medicaid penalty as discussed above.

Just moving assets from your husband's name to your name will not allow him to qualify for Medicaid. Since you are married Medicaid will factor in based on assets that are in both of your names. You need to immediately discuss options for modifying your assets so that he can qualify for Medicaid with an Elder and Disability Law attorney. You can find an attorney at www.naela.org.

I am cannot provide you with specific legal advise. I can provide you with general information about the law related to your question. My answer, and any information that you can find online, should not take the place of having a detailed consultation with a lawyer in your area to advise you regarding your specific issues.

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Customer reply replied 5 years ago

Can I just withdraw cash without any repercussions????? Say I take out $20,0000 or our 401 K. It is our money but can I withdraw that amount without any red flags?????

Estate Lawyer: John Elder, Estate & Elder Law replied 5 years ago
You can certainly withdrawal the money. You cannot "give" it to anyone. Even if it is out of the 401K if it says in your name it is still your countable asset. You ARE legally required to report cash as well as accounts.

Please also remember that if you pull out 401K assets that all money you pull out is subject to income tax. You will have to pay income tax on the money pulled out of the 401K.
John Elder
John Elder, Estate & Elder Law
Category: Estate Law
Satisfied Customers: 4,632
Experience: Over 14 years experience in Medicaid, Estates, Trust.
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