Gifting is what's done after you're dead. Until then, your finances are meant to support YOU and pay for YOUR care.
I know it isn't sexy or fun to spend enormous amounts of money on nursing homes, caregivers, or Depends, and it often conflicts with our dream of leaving a nice chunk of change when we die, but that happens only AFTER you're dead and all your bills have been paid.
MaryLou44, here are more facts to consider: - getting (and staying) in a good and reputable facility means you have to plan in advance to avoid waiting lists. If you are already a Medicaid recipient before getting into a facility you may bump up against waiting lists. The existing residents in a facility get first dibs on Medicaid beds. - your best bet is to go into a facility on private pay first. You must make sure this facility actually accepts Medicaid recipients (many do not). - Medicaid (in most states) does not pay for IL, AL or MC, it only pays for LTC and you are NOT in a private room when on Medicaid.
My husband and I just completed a Living Trust, the funds of which are to be spent on our elder care first and foremost. My sons all understand that they are not to "expect" an inheritance, but they might depending on what trajectory my and my husband's elder years takes. When you set up the expectation of an inheritance for your adult children, you can create unhealthy conditions for yourself as you age and decline. Money changes people (yes, even our own children). Sometimes people make different decisions on your behalf because they want to preserve their inheritance, and not you. Please read some of the other topic posts on this forum to understand how often this happens.
Right now it is more important that you get your important documents in order, if you haven't already: Durable PoA, Medical Representative, Advance Healthcare Directive. These are what guides your best care in the way you wish it when you are no longer able to be in control. Making a Living Trust helps protect your assets and leaves very, very specific guidance as to your estate and helps prevent financial abuse or mishandling of monies (often by the owner of the assets when they develop dementia). It is well worth the time, effort and cost. Once it's done you will have a lot of peace of mind and your kids will know exactly what to do. A Living Trust means that most (but not all) assets will avoid probate. It makes your exit as simplified as possible, as a gift to your children (in my opinion).
Your children should understand that they are to save for their futures just like you did. If they expect an inheritance they may not do this for themselves. Plus, there is nothing to guarantee that your money may get all used up in ways you never anticipated -- then everyone loses, mostly you.
Avoiding paying for your own care when you have the funds means that you want ME (the tax payer) to foot the bill for you when you actually had the funds so that your adult children (who are perfectly capable of earning their own money) can get it instead. Please don't do that to me, and all the other taxpayers.
MaryLou, if you want "preserve" your money for your family, visit an eldercare attorney who is well versed in Medicaid in your state.
Don't be confused by IRS gifting rules and limits which have nothing to do with qualifying for Medicaid.
Understand that in most states, there is a 5 year "lookback"--Medicaid will require 5 years of financial accounting to see if you have given away any assets.
Medicaid for long term care is breaking the bank for many states. I don’t know the answer to the problems with Medicaid or long term care. But I believe you should pay for your care if you have the assets - not give them to your kids. Mr. Bill’s answer is the best. Plan more than 5 yrs ahead.
It's not cheating if it's legal, it's sound financial planning. You can be da**ed sure that the wealthy have accountants who help them take advantage of every tax loophole.
If you want to ensure that your children or anyone else for that matter receive some or all of your assets after you pass away you may want to start early in preparation for that. If your health deteriorates to the point of needing nursing home care you may be faced with a $14,000 a month bill. If you don't have that kind of money you can go on Medicaid, but if you've given any significant amount of money away in the last 5 years, you may not get approved for Medicaid. Thus you want to do any financial planning 5 years before you need nursing home care. Please note I am not commenting on any moral implications or endorsing that anyone does this to "cheat" the system.
Use your assets to pay for your care not for your children’s inheritances. Taxpayers should not be paying your Medicaid while your are given your assets. Medicaid is for the truly indigent not inheritances. Getting an attorney to show you how to protect your assets and qualify for Medicaid is just as wrong. Just because they show you something legal does not make it right.
I agree with Geaton, this is not something you want to do based on advice gleaned from random internet sources. Find a lawyer/financial planner/CPA who are well versed in estate planning and Medicaid. Expensive - maybe. But not nearly as expensive as doing it wrong and bearing the full cost of long term care.
You may be interested in reading a thread where the poster is currently trying to get Medicaid approval but there has been gifting in the last five years. They cannot get medicaid.
Your profile states you want to preserve assets for your family. I sure would like to do that too, but if I need care when I am older without assets I sure want to be able to qualify for medicaid. I DO NOT want my children to be put in a position that they would have to provide my care. How terribly unfair to them. But, if I were to gift them my assets that may very well be the result of my so called "generosity".
I am sure you do not want to burden your children with your care either. See an elder law attorney to see how you might be able to preserve your assets for your children.
Assets include your home as well. You cannot gift them the yearly allowed amount of the IRS either. Many people think that is ok since allowed by the IRS, it is not permitted under medicaid.
MaryLou Basically “gifting” is prohibited to dispose of assets if you are concerned you might need Medicaid in your future. Assets must be used for the benefit of the elder and not gifted. Idea being that an elder should use their savings to pay for their own care and not ask the government to pay their way unless truly needed. There are some exempt assets like the home and one car but only under certain circumstances. One must also be careful to manage the funds carefully in order to avoid any appearance of gifting. There are state specific rules. Find a certified elder attorney in your area to determine your best course of action.
You cannot "gift" to dispose of assets. Medicaid has a 5 year look back. Within that look back you cannot "gift" or hide money. There will be a penalty if they find out money has been transferred. Medicaid is for people that only have a small pension and SS. If the person has money it needs to be used for their care. So, if they can no longer care for themselves they need to go into an AL or LTC facility and spend down what they have an apply for Medicaid.
This is a financial/legal question that is specific to each state's Medicaid rules. You will need to consult with an elder law/estate attorney or Medicaid Planner for your state.
I know it isn't sexy or fun to spend enormous amounts of money on nursing homes, caregivers, or Depends, and it often conflicts with our dream of leaving a nice chunk of change when we die, but that happens only AFTER you're dead and all your bills have been paid.
- getting (and staying) in a good and reputable facility means you have to plan in advance to avoid waiting lists. If you are already a Medicaid recipient before getting into a facility you may bump up against waiting lists. The existing residents in a facility get first dibs on Medicaid beds.
- your best bet is to go into a facility on private pay first. You must make sure this facility actually accepts Medicaid recipients (many do not).
- Medicaid (in most states) does not pay for IL, AL or MC, it only pays for LTC and you are NOT in a private room when on Medicaid.
My husband and I just completed a Living Trust, the funds of which are to be spent on our elder care first and foremost. My sons all understand that they are not to "expect" an inheritance, but they might depending on what trajectory my and my husband's elder years takes. When you set up the expectation of an inheritance for your adult children, you can create unhealthy conditions for yourself as you age and decline. Money changes people (yes, even our own children). Sometimes people make different decisions on your behalf because they want to preserve their inheritance, and not you. Please read some of the other topic posts on this forum to understand how often this happens.
Right now it is more important that you get your important documents in order, if you haven't already: Durable PoA, Medical Representative, Advance Healthcare Directive. These are what guides your best care in the way you wish it when you are no longer able to be in control. Making a Living Trust helps protect your assets and leaves very, very specific guidance as to your estate and helps prevent financial abuse or mishandling of monies (often by the owner of the assets when they develop dementia). It is well worth the time, effort and cost. Once it's done you will have a lot of peace of mind and your kids will know exactly what to do. A Living Trust means that most (but not all) assets will avoid probate. It makes your exit as simplified as possible, as a gift to your children (in my opinion).
Your children should understand that they are to save for their futures just like you did. If they expect an inheritance they may not do this for themselves. Plus, there is nothing to guarantee that your money may get all used up in ways you never anticipated -- then everyone loses, mostly you.
Avoiding paying for your own care when you have the funds means that you want ME (the tax payer) to foot the bill for you when you actually had the funds so that your adult children (who are perfectly capable of earning their own money) can get it instead. Please don't do that to me, and all the other taxpayers.
Don't be confused by IRS gifting rules and limits which have nothing to do with qualifying for Medicaid.
Understand that in most states, there is a 5 year "lookback"--Medicaid will require 5 years of financial accounting to see if you have given away any assets.
https://www.agingcare.com/questions/medicaid-look-back-not-passed-how-do-they-get-care-471633.htm?orderby=oldest
I am sure you do not want to burden your children with your care either. See an elder law attorney to see how you might be able to preserve your assets for your children.
Assets include your home as well. You cannot gift them the yearly allowed amount of the IRS either. Many people think that is ok since allowed by the IRS, it is not permitted under medicaid.
Basically “gifting” is prohibited to dispose of assets if you are concerned you might need Medicaid in your future. Assets must be used for the benefit of the elder and not gifted. Idea being that an elder should use their savings to pay for their own care and not ask the government to pay their way unless truly needed.
There are some exempt assets like the home and one car but only under certain circumstances. One must also be careful to manage the funds carefully in order to avoid any appearance of gifting. There are state specific rules.
Find a certified elder attorney in your area to determine your best course of action.