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Old 08-27-2011, 07:30 AM
 
10,829 posts, read 14,893,640 times
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Quote:
Originally Posted by cls88 View Post
Your wife's case is exactly what I have seen happened to people around me, and it is something I don't want to happen to my children. I am with you on the marriage thing - living together can simplify lots of issues.
akck mentioned the gifts of guns.

The Internal Revenue Service allows each individual to give away, as gifts, up to $13,000 per person, per year. This is a way to give your money to who you desire.

Here is a very short article that explains it.
IRS Gift Tax Limit Amount for 2010, 2011 - IRS And Taxes - Zimbio

Since they are not going to let you give all your money away, right as you need a care facility (so as to hide your money so that Medicaid finds you broke and they will pay for the care facility) there is a time limit. I think you have to be broke 36 months before you might need a care facility. So, your monetary gift giving has to be done far beforehand.

My Father and my sister and I discussed this gift program that is permissable by the IRS. We did not execute the plan, but here is what the plan was:
My Father would begin giving his money away to us, as IRS gifts. We would each put these funds is an account in our name. We'd do this until the gifts ended. My Father's social security and pension was way more than he needed to pay his bills and he had good insurance. No need for his savings to have to be used for a care facility until he was dead broke and nothing left but his house. And only at that point, would Medicaid pay for the care (you are out of money and have nothing left but your house)

There would be a mutual agreement between the three of us. Once the yearly gifts, according to IRS rules, were over, and each of us had these accounts in our names, then we could not and would not withdraw one penny as our own, until my Father passed. At any time, while he was living, if he needed any of the money for any reason, we'd each withdraw equal amounts and send to him. If he needed $2000, for some medical device or equipment, we go to our special gift accounts, and each withdraw $1000 and send to him. This was discussed with, and approved by, a lawyer. The only catch is, you must be basically out of money about 36 months before you'd need to enter a nursing home. So, the gift giving must proceed promptly.
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Old 08-27-2011, 02:49 PM
 
10,824 posts, read 8,086,306 times
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Quote:
Originally Posted by howard555 View Post
This was discussed with, and approved by, a lawyer. The only catch is, you must be basically out of money about 36 months before you'd need to enter a nursing home. So, the gift giving must proceed promptly.
You might want to bone up on the Medicaid Estate Recovery Act as applied by your state. Did your lawyer advise you of the potential ramifications of your plan?

The act allows Medicaid to scrutinize any gifts given within five years of applying for Medicaid, such as when someone applies upon entering a nursing home. If money is given to relatives within five years of entering the nursing home, the penalty may be that more time must pass before someone can use Medicaid. If someone is found to have given all his money away to qualify for Medicaid, he can be charged with fraud.
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Old 08-27-2011, 02:58 PM
 
Location: SoCal desert
8,093 posts, read 13,253,985 times
Reputation: 14870
Quote:
Originally Posted by howard555 View Post
My Father and my sister and I discussed this gift program that is permissable by the IRS. We did not execute the plan, but here is what the plan was:

(snipped)

... then we could not and would not withdraw one penny as our own, until my Father passed. At any time, while he was living, if he needed any of the money for any reason, we'd each withdraw equal amounts and send to him. If he needed $2000, for some medical device or equipment, we go to our special gift accounts, and each withdraw $1000 and send to him. This was discussed with, and approved by, a lawyer.
I'm glad you didn't execute this plan.

I'm surprised a lawyer approved this plan since a gift 'with strings attached' is not considered a gift.
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Old 08-27-2011, 03:18 PM
 
10,829 posts, read 14,893,640 times
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Quote:
Originally Posted by biscuitmom View Post
You might want to bone up on the Medicaid Estate Recovery Act as applied by your state.

The act allows Medicaid to scrutinize any gifts given within five years of applying for Medicaid, such as when someone applies upon entering a nursing home.
I said I thought the time frame was 36 months.

5 years makes it 60 months.

Provisions have been made in the tax code for individuals to give gifts of up to $13,000 per person per year.
Proper estate planning through a lawyer, and gift giving, can preserve a bulk of your life savings, for the people you want to have it.

Last edited by howard555; 08-27-2011 at 03:28 PM..
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