Asset gifting
- 1. GIFTING ASSETS FOR MEDICAID QUALIFICATION Recently a youngish widow (60s) asked about the feasibility of gifting all her property to her son to avoid the need for Medicaid spend down. This is a drastic step that should only be contemplated after consultation with an experienced Elder Law Attorney. There are different options available to parents who are worried about losing everything they have accumulated should they find themselves in need of long term care. Generally speaking, it is not a good idea to gift assets to a child. First, once the assets are gifted to a son, they become his and creditors can take them from him. Second, the son might spend the money and leave the parent out in the cold. Next, if the son is married, a divorce court could divide the assets between the son and his ex-spouse. And if the son dies, the assets will go to his heirs, who will have no obligation to use them for the parent’s benefit. If the parent gifts her home to her son, she loses her tax and homestead exemptions, could be required to pay rent, and when the home is sold, the son will have to pay capital gains tax on the profit unless it is his principal residence. Finally, if any of the gifted assets have a low cost basis, the son will be taxed on any profit he makes when they are sold. An experienced Elder Law Attorney can create an estate plan to help you qualify for benefits while preserving assets and ensuring your quality of life and peace of mind. A well thought out plan can allow you to receive the benefit of and income from your assets during your lifetime, and also qualify you to receive Medicaid benefits to pay for your nursing home expenses. Before you take any action to protect your assets from nursing home costs, speak with a qualified Elder Law Attorney. These types of plans are complicated and require a comprehensive analysis to ensure the right plan is put in place. Taking the wrong action can seriously impact you and your family.