A new client of mine has a fifty year old single disabled brother (mentally challenged). The only asset the brother owns of any substance is $150,000.00 in a traditional IRA. My clent is concerned about the brother owning these assets and being ineligible for public assistance should the need arise. One thought that came to mind was to distribute the IRA assets to the brother, pay the income tax (assuming penalty tax can be avoided because of disability) and then have the brother gift what is remaining back to family members who support him. The question being posed is there any alternative to the IRA distribution so that the dependent brother would be eligible for public assistance should the need arise – sort of have your cake and eat it too.

Any thoughts or comments on this. Thanks !!!