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My Mom does not want her savings to be taken from her. She wants the money she and my deceased Dad earned to go to myself and her Grandson who will be attending college in 2020. How much can she gift without penalty?

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I think it’s fair to say that
most elders and their children would rather keep all the money they worked hard for over their life time.

I think its also fair to say that the money they earned was earned to support them during their life. The daily expenses of every day living - even with the added costs of getting old - day in and day out.

So why is it that so many seem to think that once an elder moves to a supportive living environment - that they should no longer have to pay for their daily living expenses?
That that money should be squirred away for relatives to inherit- while the general tax paying citizens now pick up that expense.

Sure. There are thousands and thousands of elderly receiving Medicaid- curtesy of tax paying citizens. I have no issue with people who have a genuine need receiving that assistance. As a civilized society it is our responsibility and the right thing to do - to take care of those in need.

But I DO NOT WANT TO PAY for someone’s parent by way of MY HARD EARNED MONEY- so one of their relatives can inherit a chunk of change. I don’t care how they’ll use the money - college, a house, whatever.

In my parents final years they spent more than $200,000.00 on their care. No exaggeration. Would I have liked to have inherited that money? Hell yes!!! But it was their money to pay for their expenses of every day living - along with all the added expenses that declining mental and
physical heath that comes with living well past age 80.

Why is this concept so hard for
people to understand? Why do they feel it’s okay for me - and you - to pay for their parent to live in an AL or a NH - while they can look forward to inheriting a nice chuck of change.

This topic - this way of thinking - just chaps my hind to no end.
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rovana Nov 2018
Rainmom, I suspect that many people think that the US should have the humane type of society that Europeans have. They think that Social Security and Medicare they contribute to should cover custodial care as other industrial nations do. But they say they don't want "socialism" (until they figure out they would be better off with some type of "socialism").  Let's keep in mind that a so-called "cradle to grave" system does mean higher taxes. Is it worth it?  Well depends on how you want to place your bets on your longevity. But you are quite right - money is to be spent on living costs and medical care for the parent, not hidden to be an inheritance.
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If your looking at an imminent AL or NH admission, really imo, it’s too late to do anything creative $$wise unless the elder is flat out wealthy.
Ideally an irrevocable UTMA would have been done years ago.

In my experience, whether or not transferring $ causes issues will be interdependent on all kinds of things, the biggest will be IF your mom is LIKELY to have enough $$$ to private pay for her care whether it’s in a AL this year or in the future when her care needs increase so she moves to a NH. And since mom does come with a preset expiration date determining how much she needs is filled with what if’s....

Average NH stay is 2.5 years with most NH charging 8k - 15k a mo.
So does mom have $$$$ BEYOND 240k - 450k?
add in another 50k to supplement the costs of her AL?
So does she have over $300k - 500k?

if not, depending on her health, she is likely to outlive her savings and will apply for Medicaid. Any $ transferred or gifted within 5 years of the Medicaid application date will place a transfer penalty on her eligibility.

What makes this especially difficult is that in order to apply for LTC Medicaid they basically have to be impoverished with 2k max in nonexempt assets as a widow. And you must provide up to 5 years of her banking info or any assets tied to her SS#. State will place a transfer penalty by # of days based on your state Medicaid daily room & board reimbursement rate. Avg R&B paid abt $175 day, so 50k gifted means basically 285 days she is ineligible for Medicaid. Which means family private pays for care or mom moves in to your home & you caregive.

Really it’s worthwhile for mom too meet with elder law atty to update her legal and see what she might be able to do for her own benefit, like a Medicaid compliant special needs trust.

Also If your kid is a Rising junior, it’s not too soon to look into schools and what financial aid available and pls pls look at what FR-SR completion rates are. If he’s looking at any that require “the common application”, it’s a bit of a beast and is a student & parent type of application. Also if he’s wanting a school with heavy Greek, and you flat cannot afford frat. costs, pls try to have him look at other schools. He can get a Stafford each year; Stafford I think available for all legit schools & it’s his debt, not yours.
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Paying for assisted living is not taking her money from her. It is common, ordinary living expenses. That is what Medicaid spend down is supposed to do.
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If you actually do mean an Assisted living facility, in my area they are all private pay, they don’t accept Medicaid. They run about 3-5000 a month depending on what services the elder needs. So her money would need to be used to pay for that. If she doesn’t want her money to be “taken from her”, who does she think should pay?
Many Nursing Homes (long term care facilities) do accept Medicaid however. I don’t know if she qualifies physical for that type of facility. But medicaid does require assets to be spent down on her care first to quality, and will look back 5 years from the application to see if funds have been gifted. I think you may benefit by reading up on the types of facilities available and how to pay for them.

The “gifting without penalty” concept you may be thinking of might be relating to taxes, not future Medicaid approval. 2 entirely different things.
Please read the responses below regarding trying to hide assets from medicaid.
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You can consult an estate planning attorney in your state to see what options your mom has. We found a few that offer free consultations where they explained the rules. We only had to pay if we decided to follow some of their suggestions and hired them to draw up the paperwork.

If you are at all tempted to transfer the money to yourself and your son, please read through this forum for posts where people have family members who desperately need nursing home care, have no money to pay for it and have to spend down the amount of money that was gifted before Medicaid will help. The gifted money is often long gone and I honestly don't know what these families do. It's a mess that you should really try to avoid.
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Why should taxpayers have to take care of your mom so you and your son can get an inheritance?

Her money is for her care and when it's gone she can get public aid.

Giving it away and placing that burden on taxpayers is unethical and criminal.

Encourage your son to get high marks and qualify for scholarships so he can appreciate hard work and reward.
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Who does Mom think is going to pay for the AL? Unless she gets a large amt in SS and pension, she will need her savings to offset what she doesn't bring in in reg. Income. My Moms AL was 5k a month. Her care part went up as she needed more help. In my area, ALs may except Medicaid after 2 yrs private pay. But you have to have run out of money. There is a five year look back and any large amounts going out of her accounts will be questioned. As said, Moms money is for her care.
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There are two considerations here: gifting as it concerns the IRS and gifting as it may concern Medicaid. If you consult a financial advisor or attorney, BE SURE they are familiar with Medicaid rules.
Many capital preservation advisers are not. They think in terms of the IRS - a totally different set of issues.
The thing with Medicaid is NO gifting within a certain time period (the lookback period) or there will be a transfer penalty.  Medicaid is a welfare program and applicants are expected to basically first use their assets to pay for their care.  So you have to think about your situation and keep in mind that if you live long enough, and are not very wealthy, you will almost certainly depend on Medicaid.  A different world from what your mom and dad expected.
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