Elder Law Answers
Must a Medicaid Applicant's Earlier Gifts of Savings Bonds Be Returned?
My mother-in-law gave $10,000 in savings bonds to each of her children in 2010. She is now confined to a nursing home and...
Read moreWill Our Uncle's Cash Gifts to Us Need to Be Repaid?
- September 24th, 2014
Q
My uncle has no children of his own, only three nieces. He is considering gifting each of us $14,000, the maximum amount in 2014 that the IRS allows a taxpayer to gift to another individual without reporting the gift. If my uncle were to enter a nursing home within five years, would we be responsible to pay back the gifts?
A
The answer technically is no, but the practical answer may be yes. Here’s how it works: If your uncle applies for Medicaid within five years of the gifts, he will be deemed ineligible for benefits for a certain amount of time based on the amount he gave away and the average cost of nursing home care in the state. You may “cure” this penalty period by returning to your uncle the funds he gives to you. This may or may not be an effective long-term care plan. I’d recommend consulting with a local elder law attorney for a more complete explanation of how this works and your uncle’s planning options.
For more on how gifts can affect Medicaid eligibility, click here.