In this Elder Law Minute, Wes Coulson discusses what Medicaid considers as a gift.
Hi, I’m Wes Coulson from the Elder Care Law Group, proudly serving clients throughout the St. Louis metropolitan area and region, and this is your Elder Law Minute. I want to talk to you today about what Medicaid treats and considers as a gift for purposes of the look back period and transfer penalties. Just to familiarize you a bit with the rule, there is a question on Medicaid applications:
Have you made any gifts or other transfers of assets for less than fair market value within 5 years before applying?
If the answer is yes, you have to tell about those and they are going to cause a delay in eligibility. Basically, the more you’ve given away within 5 years, the longer the delay in eligibility. Again, that raises the important question – What do they consider a gift?
To start with the easy one, if you give money to somebody, write somebody a check just for being nice, it’s a gift. But it extends beyond that. They are looking for other things that fall within that definition of “transfer for less than fair market value.” Let me give you a couple examples:
- If you say, “Well, I didn’t buy my daughter a new car. I bought a new car for $25,000 and I sold it to her for $1000.” – Sorry, that’s $24,000 transfer
- “I didn’t give my son $20,000, I loaned him $20,000 when he got laid off work. Of course, he’s my son, we didn’t sign any paperwork. I just said son, when you get back on your feet, pay me back and he said, sure Dad.” – That’s a $20,000 transfer.
Another thing that fools people a lot is the rules on joint bank accounts. They look at that 5 year look back and they go, “Well, you know Mom added us three kids on the account 10 years ago when Dad died, so it belongs to all four of us now, and we can each take our fourth out of the account.” Sorry, it doesn’t work that way. Those are transfers. Even if Mom didn’t go to the bank and had nothing to do with it, unless it was your money that went into the account that you’re taking out, that’s another transfer.
If you’re facing a transfer penalty, is there anything that you can do about it so it doesn’t cause a delay in eligibility? Let me answer that question at two levels. First, on one level that’s a complicated question to answer. On a second level, it’s an easy question to answer, and that is – Come see us at the Elder Care Law Group and we’ll figure out how to help you fix that problem.
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The Elder Care Law Group is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Elder Care Law Group, our clients’ well-being is our number one priority. For immediate help, call (618) 632-7000 (IL) or (314) 932-5573 (MO), or Contact Us and we will get in touch as soon as possible.