Dear Clients and Friends,
The gifting discussion continues and this question shines a bright light on yet another issue to be concerned with when Medicaid eligibility may become necessary. Although I have discussed gifting from a tax point of view, I thank this next reader for asking a question that needs to be answered from the point of view of the Medicaid eligibility rules.
You set up trusts for my mother. For money that is not in an irrevocable trust, how much can be gifted annually from her to her child (me) and her grandchildren without running afoul of the Medicaid look back should she need to go into a nursing home? I am hoping that there is some dollar figure or mechanism that would escape Medicaid’s scrutiny.
Never lose hope. It is a wonderful thing to hold on to. Unfortunately, you will have to direct your hope in another direction. In a series of prior LISTEN TO LAWRENCE LETTERS, I wrote about the $15,000 per year per person GIFT TAX exclusion. This exclusion is a TAX law provision, not a MEDICAID law provision. There is NO annual exclusion, per person or otherwise, in the MEDICAID world. All gifts to children and grandchildren will be subject to the look-back and penalty rules unless some other exclusion applies.
What other exclusions you ask? Well, all gifts to a child with disabilities are exempt transfers. Also, you can transfer, penalty-free, your home to a child who has lived in the home with you for two years preceding a nursing home stay AND provided care to you during that time attempting to keep you out of a nursing home. So you see, there are limited exclusions (and there are some others not mentioned here), but no ANNUAL exclusion amount.
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Until next time…
peace, health and happiness,
Lawrence Eric Davidow