Here’s a question . Let’s say a person had $100k 3 yrs ago. She gifted it out to her grandkids as she didn’t need it anymore as she made $3k a month in pension and social security . If she went in nursing home at $10k a month they’ll take here social security and pension if she can’t pay the nursing home and put her on Medicaid right? If she has equity in here house they’ll seize the house and sell it and take the equity when she dies right ?Will they go after the Grandkids for the $100k she gifted out 3 yrs earlier ?
Is There a Way to Make a Gift After Death Without Worrying About the Medicaid Five-Year Lookback?
- Thread starter Dale M Krause
- Start date
Here’s a question . Let’s say a person had $100k 3 yrs ago. She gifted it out to her grandkids as she didn’t need it anymore as she made $3k a month in pension and social security . If she went in nursing home at $10k a month they’ll take here social security and pension if she can’t pay the nursing home and put her on Medicaid right? If she has equity in here house they’ll seize the house and sell it and take the equity when she dies right ?Will they go after the Grandkids for the $100k she gifted out 3 yrs earlier ?
- 19,049
It doesn't work like that. They don't take anything and they can't force her to sell anything.
But, if she has too much in countable assets, the gift being a countable asset, then she will not qualify for Medicaid.
Being on a pension and SS with that much income is going to disqualify her from Medicaid anyway. Medicaid is welfare. It is not a catchall for people with money to get the taxpayers to fund their nursing home stay.
These regulations are a burden for us to deal with. Especially in the FE arena where usually their only asset is the cash value. So it's really just a reporting matter. Help clients with that reporting to stay current and it's a huge referral situation.
The reason these regulations exist is to try and prevent people from giving away assets and hiding money just to get on the taxpayer dole.
This is America, we should take of our people that can't. But we should not be paying for people that are just trying to beat the system.
- 4,618
Cant get the money back from grandkids after given away. Also, the giver would also owe gift taxes for giving the grandkids that much money as you are only able to gift $18k per year per person. So, if she gave $100k total split between 3 grandkids, she would owe a large gift tax bill on about $46k excess gift. (unless she filed an estate tax return now & took at hit on her lifetime exemption--rare).
Then, for 5 years after the gift, that 100k will be counted as money she should have spent on her own care during her penalty period. If Medicaid says the average monthly care is say, $9k per month, she will be ineligible for 11 months for the $100k gift as the 100k would have paid for 11 months of care.
So my question from before . With Medicaid your allowed 1 house ( up to $600 k equity ) and 1 car I’ve read many times and I get people on Medicaid with little income . Forget the nursing home . When the person on Medicaid has the house asset what happens when they die ? Does Medicaid try to get the equity in the house ? Or does the house with equity pass to the heirs ?
- 4,618
Estate Recovery | Medicaid
State Medicaid programs must recover certain Medicaid benefits paid on behalf of a Medicaid enrollee. For individuals age 55 or older, states are required to seek recovery of payments from the individual's estate for nursing facility services, home and community-based services, and related...
It would be incredibly dumb not to do this.
The form is literally 3 or 4 pages long. She probably had to do more work just getting the 100k to the grandkids in the first place.
- 4,618
Agree. A ton of wealthy couples are doing that now while they can pass $27 million before the 2026 reverts to 2017 levels. However, I thought I read one time that all estate returns are audited
My siblings and I are keeping are eye on this . It reverts to 2017 levels inflation Adjusted which is about $7 million they predict for single person . Few people realize you can gift the almost $14 mil when alive .
- 4,618
Lots of asset/land rich, cash poor family owned businesses are working with their attorneys to discount the total value, but also transfer shares of the farm/business into irrevocable trusts or next generation. Not only to take advantage of the $27.2M you can gift today, but also to put the assets most likely to appreciate into that $27.2M so that all the future growth is out of the estate already
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Nobody did it like Steinbrenner:
Personally, I hope it goes even lower. I'm not inheriting 27 million or 7 million so the lower it goes, the more life insurance I can sell.
It's over 27m.
