A friend's mom has $100K and wants to gift all to kids, then let feds pay for any senior care. Wise or not?

inheritence, gifting to siblings, convalesent care, senior issues, tax advice on gifting, skilled nursing, Medicare, SSI

President Bush signed into law, recently legislation sent to him by Congress called the Deficit Reduction Act. Included in it was the removal of the provisions that allowed giving away all of one's assets to children to go onto medicaid. Now, there is no limit to that time and the state can go to the children to collect it in a forced spend-down if there was an asset transfer. Additionally, there is a 5 year wait from the time someone is eligible for benefits until the government will pay.

This is not good for nursing homes that are to care for the artificially impoverished, who can then in 30 states that have a laws pertaining to Filial Responsibility, go to any immediate family member (so far a child or a parent, though that may also end up changing) for payment during the 5 year waiting period and legally get the payments. Several of the other states, most notably Texas, will have this type of law soon.

So, in addition to avoiding a gift tax, she needs to consider this. That loop hole has, so far, been closed.

the five year look back period has always been in effect and is not new in this regard..... this has to do with transfer of assets to a TRUST ONLY!!!not to individuals...I would not worry about having to pay..... that will be the least of your problems Report It

Nope - kids (who are physically/mentally fit) shouldn't be given anything by their parents as adults.

The best thing the mom can give her kids are the tools to be self sufficient adults. What if she wants/needs something that Medicare doesn't cover? What if having some private funds would get her better senior care facilities? What's to say the kids wont just blow the money?

Worst idea ever. Not only is it being a complete mooch; the qualty of care she will get will be awful and her kids
(if they are decent people) will end up spending anything they get on her care.

Let the kids save their own money and take care of herself first.

Make sure there is at least a 2 year gap between the time she gives away her money and the time she applies for any government care, otherwise they will claim she did it on purpose and give her no assisstance. This applies to nursing homes, and any government aid.

Not wise..Because the so called feds funds may not be there..then what?

Also, if she gives over the gifting limit to one person in one year (I think it's $12,000 for 2007), then the friends mom also has to pay Federal Gift Tax.

legal you say.......... maybe...... federal law has changed on this topic.. it is a violation of federal law to transferrer money to anyone in order to make yourself eligible for government benefits WITHOUT the assistance of an attorney who specializes in medicaid planning and elder care issues..

to those who say you are not required to retain a lawyer or specialized attorney in order to transfer your own money.. i say to impoverish yourself or a relative in order to facilitate the receipt of government benefits without PROPER COUNSEL at the time of transfer will jeopardize the freedom of the very people the transf wished to help... this is not an issue if you NEVER require or receive government benefits.
but WILL be a crime at the very moment that government benefits are applied for(is the transferrer even familiar with the documentation required to apply for medicaid?) and with the high cost of health care will surely be prosecuted by a U S attorney for violation of the federal statute

Don't give the money to your kids, if you do they'll most likely end up being financially irresponsible adults, just look at the Olsen Twins. Give the money to a charity.

She'd be better of taking the interest off the $100K and buying a long term care policy.