Wednesday, February 19, 2014

Gifting Considerations

Gifting can have serious consequences, in the event a person needs nursing home care and doesn't have enough funds to pay for his/her care for 5 years.

As we discussed in a previous post, there is a five (5) year disqualification period for Medicaid purposes for any improper transfer or gift. The question is what constitutes an improper transfer?
  • Giving away assets for less than FMV unless such transfer is exempt under the rules; paying for your grandchild's education, your daughter's new car, and/or giving each of your children $14,000.00 for Christmas every year are all improper transfers
  • Adding a child or another third party as a partial owner/owner of your property
  • Selling assets for less than FMV; i.e., my car was worth $10,000.00, but I gave it to my grandson for $2,000.00
  • Purchasing an annuity that doesn't comply with the Medicaid rules
  • Paying a family member for services without a written contract
  • Disclaiming assets from an inheritance
Unfortunately, the Medicaid system's holiday spirit can be more like Ebenezer Scrooge's. This being the case, if you are contemplating any "improper transfers" and there is any possibility that you or your spouse could need nursing home assistance down the road, it is important to contact your elder law attorney prior to doing so.