Seniors who have questions about their financial health or concerns about long-term care costs and options have no shortage of people for advice. From the call-in radio shows, to an overworked nursing home employee, or just a neighbor trying to be helpful, there is a lot of advice out there that seniors may get that could spell disaster for them or their children in the future. Let’s look at a couple of the big ones:
Gifting: You may have heard that you can give away $14,000 a year and never have to worry about gift taxes from the IRS. While it’s true that the IRS would not require disclosure, the Medicaid rules include harsh penalties for gifts made within the 5-year look-back period, even those far under $14,000. Quick example: If you gave away $14,000 to each of your two children and needed the nursing home, you’d have a big problem. When the money runs out, Medicaid would not pay the bill. Instead, you’d have to come up with the money (or ask your kids for it back) to pay the next five months of care.
Putting home in a child’s name: Some seniors are told that to avoid losing their home to nursing home costs, they should put their home in the name of an adult child. If it sounds too good to be true, it is! Doing so is as a gift under the Medicaid rules and could cause ineligibility for Medicaid for a long period of time. In addition, the transfer could set the children up for a large capital gains tax bill when the home is sold. Lastly, the child’s problems are now the parent’s problems – better hope the child doesn’t get divorced or sued….
Unfortunately, many people with good intentions provide seniors with bad advice. If you or a loved one is facing a long-term care crisis, be sure to work with an Elder Law attorney at AlerStallings who will guide you through the process. Facing the Medicaid system on your own or with non-expert help can lead to disastrous results.