Many people are under the impression that individuals are allowed to make annual gifts of $14,000.00 (current annual gift tax exemption) to their children every year without any consequences.
However, this tidbit of "common knowledge" is false!
Although there are no consequences to making a $14,000.00 gift from a federal gift tax perspective, there is an entirely different set of rules from a Medicaid perspective which can create adverse consequences. Making gifts to your children every year could have a significant impact on the your and/or your spouse's eligibility for Medicaid. Under the Medicaid rules, there is a five (5) year disqualification period for all gifts made and there are no minimum gift amounts. This being the case, if you are contemplating giving a gift to a child or to another third party, it is important to consult not only with your accountant, but also with an elder law attorney so that you have an understanding of the impact of that gift on Medicaid eligibility.
Wednesday, November 27, 2013
Friday, November 1, 2013
People often think about guardianships as applying to children, but they can apply to anyone at any age.
For example, did you know that when your child turns eighteen (18) years of age, you no longer have the legal authority to make heath care and financial decisions for him or her unless your child appoints you to act for him or her?
Do you know that the same is true for your spouse as well, and that if you do not have a document that allows your spouse to do so, your spouse cannot access your retirement accounts, or the cash in your life insurance policy, if needed?
The legal documents that allow you to make decisions for someone else are called a health care power of attorney and a financial power of attorney. These documents can significantly minimize stress for family and friends down the road. It is also important that these documents be drafted correctly.
Were you also aware that in New Hampshire an agent under a financial power of attorney cannot make gifts unless the document specifically grants the agent the power to do so?
An adequate gifting provision can be a very important tool with respect to long term care planning and the protection of the healthy spouse. If a person does not execute those documents prior to becoming incapacitated, or if the documents do not contain the correct language to allow for planning, a guardianship over that person becomes necessary. Guardianships can be stressful, time consuming and costly. For those reasons, we recommend that everyone 18 years or older execute these documents.