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Can Financial Gifts to Children Protect an Individual's Assets from Medicaid? Harold
Stith, a 73-year old retired policeman, suffers a paralyzing stroke.
Mildred Stith, his wife of 50 years, and their daughter Joan are told
that they must find a long-term care facility for Harold. The
doctor says Harold should not return home because he would be in danger without
24-hour nursing care. Mildred has
some money in savings, but not enough to cover the monthly nursing home payments
for Harold’s care, for an extended period.
Mildred does not want to lose her house and all their hard-earned money.
She does not know what to do and wonders how she will pay $4,000.00 a
month for Harold’s care and also have money for food and other necessities.
Joan, their daughter, has heard about Medicaid benefits for nursing home
care but is concerned that her mother will have to be destitute in order for
Harold to qualify for benefits. “Can’t
Mom just give her money to me as a gift?” she asks.
“Can’t she give away $10,000 a year?
I could keep the money for her so she doesn’t lose it when Dad applies
for Medicaid.” Joan
has confused general estate and tax laws with issues of asset transfers
and Medicaid eligibility.
A “gift” to a child in this case is actually a transfer, and Medicaid
has very specific rules about transferring assets. At
the time Harold applies for Medicaid, the state will “look back” 36 months
to see if any assets have been transferred.
Medicaid regulations don’t allow individuals to give away money or
property in order to qualify for Medicaid. Any
gifts or transfers of assets or property for less than fair market value by
a Medicaid applicant must be reported if the gift was made within 36 months of
applying for Medicaid. If Mildred
makes gifts or transfers of assets in this situation, it may result in Harold
incurring a period of ineligibility for Medicaid Benefits. In
What
is the best avenue for Mr. and Mrs. Stith to follow?
There are a number of steps they can take, ranging from proper gifting
strategies to personal care contracts, private annuities, and/or requesting a
fair hearing in order to raise the Community Spouse Resource Allowance; in
conjunction with the Minimum Monthly Maintenance Need Allowance assessed to Mrs.
Stith. It would be in the Stith’s
best interest to obtain the advice of a qualified Elder Law Attorney to assist
in exploring the legal implications of the options available to them.
These strategies and others will be discussed in upcoming issues of The
SSHEL Report. The SSHEL Report: Is published as a public service by the Rice Law Firm, L.L.C. which is dedicated to serving the needs of older and disabled individuals and their families. |
