My question involves estate proceedings in the state of: Florida
My grandmother had been in a assisted care facility for a number of years. It wasn't cheap and eventually ate through an insurance fund she had set up to pay for such a thing. All she really had to her name was a condo and an IRA of around $150k. She is survived by 2 children.
When the insurance money ran out they found they were able to shuffle some things around in a way she could obtain medicare assistance with paying the assisted living. This entailed putting one of the childrens name on the deed to the condo (the one had been living in it for several years already) and the IRA was set to be split between the two upon death. I am told this allowed it to be protected from debts upon execution of the will after death. This was able to drop my grandmothers assets possession low enough to get the medicare she needed.
So recently with the death of the grandmother, the will will be processed. However there are 2 debts, one is a credit card with about 14k on it (known) and the other is an administration goof let the medicare laps for 3 months and there is a chance that about 12k $ will need to be paid as well. Clearly these need to be paid, but our question is HOW. The best way they want to do it is to use the money that is in the IRA. However the children are under the impression that if they do that, the money taken out will be considered income and thus 1) Taxed, and 2) effect social security checks as they are still working and an income of 25K is a pretty drastic offset from their current paychecks.
So the question at hand, can the money from the IRAs be used by the IRA holders to pay off the debt without that money looking like income?
They will be getting a hold of a lawyer at some point (the death certificate still has not been signed.. you would think florida would have a fast lane for this kind of stuff by now) but I am hoping to alleviate some of their fears early if I can.
My grandmother had been in a assisted care facility for a number of years. It wasn't cheap and eventually ate through an insurance fund she had set up to pay for such a thing. All she really had to her name was a condo and an IRA of around $150k. She is survived by 2 children.
When the insurance money ran out they found they were able to shuffle some things around in a way she could obtain medicare assistance with paying the assisted living. This entailed putting one of the childrens name on the deed to the condo (the one had been living in it for several years already) and the IRA was set to be split between the two upon death. I am told this allowed it to be protected from debts upon execution of the will after death. This was able to drop my grandmothers assets possession low enough to get the medicare she needed.
So recently with the death of the grandmother, the will will be processed. However there are 2 debts, one is a credit card with about 14k on it (known) and the other is an administration goof let the medicare laps for 3 months and there is a chance that about 12k $ will need to be paid as well. Clearly these need to be paid, but our question is HOW. The best way they want to do it is to use the money that is in the IRA. However the children are under the impression that if they do that, the money taken out will be considered income and thus 1) Taxed, and 2) effect social security checks as they are still working and an income of 25K is a pretty drastic offset from their current paychecks.
So the question at hand, can the money from the IRAs be used by the IRA holders to pay off the debt without that money looking like income?
They will be getting a hold of a lawyer at some point (the death certificate still has not been signed.. you would think florida would have a fast lane for this kind of stuff by now) but I am hoping to alleviate some of their fears early if I can.
Estate Assets and Debts: Deceased Mother Has Some Debt, As Well As IRA Passed Down. Use IRA W/O Tax Penalty
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