In this Elder Law Minute, Wes Coulson discusses what Medicaid considers as a gift.
In another of our videos, we mentioned that Medicaid imposes a, what’s called “transfer penalty,” for somebody who within 5 years before they apply have transferred assets for less than fair market value. When people hear that expression, which is kind of a mouthful, they say, “well, what do you mean? You mean gifts?” I do mean gifts, but I don’t just mean what people think of as out and out gifts, like I hand you $1000 or write you a check for $500. It also includes anything where something of value went to somebody else without you getting equivalent value back in return.
A gift can be not just of money. It can be of property, deeding over a timeshare, putting somebody’s name onto your house. Another one that is a big fooler is if you have many years ago, more than five years ago, say, when you became widowed, added one or more of your kids names on bank accounts and now they pull money out, well, if it’s your money they’re pulling out and not money they are putting in, even though you had nothing to do with it, that’s a transfer for less than fair market value.
Paying things for somebody else: Paying off a loan, paying off credit card debts, making house and car payments for them, those are more examples. And to be honest with you, without burying you in examples, the list kind of could go on and on. But it’s really a big deal, because one of the worst things that can happen is to apply for Medicaid, face a transfer penalty, and have no plan in place for dealing with it.
That’s one of the reasons that we tell people, don’t wait until you’ve run out of money and just apply for Medicaid. When you still have some money left early on in the process, come see us, because dealing with these potential transfer penalties to make sure that you’re not in this bad situation where you have no way of paying for a nursing home, and Medicaid’s not going to help you either doesn’t come up.
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Coulson Elder Law 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 Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (618) 632-7000 (IL) or (314) 567-9292 (MO), or Contact Us and we will get in touch as soon as possible.