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Can my father gift me money before entering a m nursing home?

Reinholds, PA |

At some point in the next couple of years my father may require assisted living. Can he give me money now as a gift or will medicaid think of that as evasion? If he can give me money, how much would be allowed?

Attorney Answers 6

Posted

Do not do anything until you meet with an elder lawyer. The law now includes any gifts within 5 years of application of medicaid, so such gifts will be included as a countable resource. Get with an elder lawyer to plan out what can be done here. Each situation is different and there are various strategies that can be employed to become eligible.

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Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is sjfpc@comcast.net , his website for more tax, estate and business articles is www.sjfpc.com. and his blog is

LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is sjfpc@comcast.net , his website is www.sjfpc.com. and his blog is <http://frommtaxes.wordpress.com/> Mr. Fromm is ethically required to state that the response herein is not legal advice and does not create an attorney/ client relationship. Also, there are no recognized legal specialties under Pennsylvania law. Any references to a trust, estate or tax lawyer refer only to the fact that Mr. Fromm limits his practice to these areas of the law. These responses are only in the form of legal education and are intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question. Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.

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Posted

If your father intends to seek Medicaid long term care coverage he should not gift money (of any amount) to anyone. Under current law, there is a five year "look back period." Your particular state law will dictate your father's options for planning, so you should talk to a local elder law attorney as soon as possible.

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Posted

well, unfortunately, three strikes and you are out. As the previous attorneys point out the five year look-back period is the law when it comes to Medicaid. Depending on the amount of assets that you dad has or doesn't have is whether an Elder Law Attorney can give you some good guidance.

I am assuming that your dad already have Powers of Attorney and other Estate Planning documents in order.

Either way, to get a solid answer on your personal situation I would suggest sitting down with an elder law attorney. My suggestion to find someone local is to look at the naela.org website.

Best wishes to you and your dad!

Legal Disclaimer: Paul A. Smolinski is licensed to practice law in the State of Illinois only, and as such, his answers to AVVO inquiries are based on his understanding of Illinois law only. His answers are for general information about perceived legal issues within this question only and no response to any posted inquiry should be deemed to extend any right of confidentiality between you and Mr. Smolinski, to constitute legal advice, or create an attorney/client or other contractual relationship. An attorney/client relationship is formed only by specific agreement including an evaluation of the specific legal problem and review of all the facts and documents at issue. We try to insure the accuracy of this information, but we cannot guarantee its accuracy. The reader should never assume that this information applies to his or her specific situation or constitutes legal advice. Therefore, please consult competent counsel that practices in the subject area in your jurisdiction and who is familiar with your specific facts and all of the circumstances.

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Posted

As all of the previous answers have indicated, the 5-year look back period is THE deterrent to attempting last-minute asset protection planning. Though a thorough review of dad's finances as against the State's eligibility requirements would be required before determining that there is nothing that can be done.

One big issue in such an analysis is how any divestment penalty would impact your father's eligibility and the family's ability to provide for the necessary care.

That said, in some instances there are other areas where we can use available exemptions to at least preserve small set-asides. Perhaps a family member is providing care services for dad for free. A caregiver's contract may be warranted where such care is compensable. If dad has not made final arrangements, in some instances monies placed in a burial trust can be exempt from the divestment rules, protecting the family from the need to pay for final expenses out-of-pocket.

As the others have pointed out, you will need to see an experienced elder/medicaid law attorney before taking any action with dad's finances.

Please note that this answer is generic in nature and does not constitute legal advice with regard to any particular circumstances or facts and does not establish an attorney client relationship.

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Posted

As the other learned counsel before me have noted, you father cannot gift money to you lest it be considered a disqualifying/penalizing transfer. However, your father can pay you money as compensation for services rendered if you provide assistance to him. You can have an Elder Law draft a caregiver agreement whereby services are provided and compensation is issued. Said payments are not considered gifts (because they consideration for services rendered...). You must have an agreement in place before money can be transferred. So, your father gets to transfer assets, without a penalty, regardless of lookback and you can received funds accordingly. As stated earlier, go see an ELDER LAW ATTORNEY;not a contracts attorney, not a real estate attorney, not a litigation attorney. Go see an elder law attorney for proper advice on this.

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Posted

It is possible for your father to gift money to you at this time since he is not planning to go to a skilled nursing facility, only assisted living in the near future. Assisted living, in Pennsylvania, is a pay as you go arrangement and is not subject to Medicaid. He has to have sufficient funds to finance his care in assisted living. If he does not need to enter a skilled nursing facility for five years following the gift, then Medicaid does not constitute a problem since it is only when he is in a skilled nursing facility that the gift will adversely affect his Medicaid benefits. Conversley, should he need a nursing home prior to five years from the date of the gift, then the money can be returned to his bank account and the gift can be undone, thereby allowing him to qualify for Medicaid. In answer to your question, Medicaid does not view a gift from dad's account as a "evasion"; if gifts are done correctly, they are permitted.

The gift can be of any amount. Note that there is no dollar restriction; however, an annual exclusion exists for a gift in the amount of $13,000 per person per year from federal gift taxes. Married couples can combine their annual exclusion amounts and gift $26,000 to each person per year without incurring any gift tax liabilities. Thus, if a gift is made by your father to an individual in excess of $13,000 per calendar year, he must file an IRS form 209 indicating that that gift has been made.

I strongly advise you to seek the counsel of a qualified elder law attorney since the issues involved in your question are complicated and should not be attempted without professional advice.

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