Income is determined by the ‘name-on-the-check’ rule. In other words, whomever the check is made payable to is the owner of the income. A pension is often either in the name of your mother or her spouse. Shifting the income from the institutionalized spouse to the spouse living outside the nursing home (the community spouse) can be done through a Qualified Domestic Relations Order (QDRO).
The process for doing this is as follows:
- Make sure that you get a Qualified Income Trust because this strategy often takes a few months to process.
- Your mother will not need to file for divorce in order to shift the income.
- Both your mother and her spouse will need to be represented by counsel, as this is litigation.
- Your attorney will need to contact the pension administrator to make sure that the requirements of I.R.C. section 414(p) are met before the order is presented to the judge.
- It should be an uncontested matter, which means you should be able to have an uncontested hearing.