Elder Law Report
Elder Law Report
Gifting and Long-Term Care Benefits: When Generosity Can Backfire
Money gifted with good intentions can lead to devastating financial consequences when long-term care becomes necessary. This eye-opening discussion between Elder Law attorneys Greg McIntyre and Brenton Begley tackles one of the most misunderstood areas of senior planning: how well-meaning asset transfers can backfire when seeking Medicaid and special assistance benefits.
The conversation cuts through common misconceptions, particularly the damaging belief that the federal gift tax exemption (currently $19,000 per person annually) provides a "free pass" for Medicaid eligibility. As the attorneys clarify, these systems operate under completely different rules, and conflating them can lead to benefit denials precisely when you need care most. They break down the dreaded "look-back period" - that window of time where every financial gift or property transfer comes under scrutiny and potentially triggers penalties that delay essential benefits.
Beyond just identifying pitfalls, McIntyre and Begley outline strategic approaches that actually work within the rules. From specialized deeds that protect property without triggering penalties to legally-sound asset protection strategies, they demonstrate that with proper planning, families can preserve their life savings while still accessing critical care benefits. Their expertise reveals the reward in finding that balance between asset protection and benefit eligibility - ensuring seniors can receive necessary care without sacrificing everything they've built.
Whether you're planning ahead or facing an immediate care crisis, this conversation offers crucial guidance for navigating the complex maze of long-term care benefits. The attorneys' closing offer of complimentary consultations underscores their commitment to helping families protect what matters most while securing the care they deserve. Ready to ensure your gifts don't become costly mistakes? Schedule a free consultation and discover how proper planning creates peace of mind.
Hi, this is Greg McIntyre with the Elder Law Report with Attorney Brenton Begley. Hey, brenton, hey. So, brenton, we're going to talk long-term care, medicaid benefits, special assistance benefits that pay for assisted living and nursing home care, and when gifting can backfire, like you know, what does that mean and how can we run afoul of those rules? And really what we think is doing the right thing is maybe hurting ourselves or doing the wrong thing. And I know where I see this.
Greg McIntyre:A lot is where people ask questions about hey, can I give out $10,000 to my grandkids, or $17,000 or $18,000, whatever the taxable exemption is for the year to my grandkids? Can I do that to get qualified for this benefit to pay for long-term care later in a spend down? And there's other actions that could really really hamstring you as well, like maybe deeding out property or drafting the wrong deeds, things like that. I think there's a lot of meat here to talk about, where people really hurt themselves when they're really thinking they're helping themselves and getting qualified for benefits to pay for long-term care while trying to protect their assets.
Brenton Begley:Yeah, that's right and you know. So. First thing we need to talk about is the look-back period. A lot of people get this mixed up. Look-back period is all about whether or not you can qualify for a benefit to help pay for long-term care.
Brenton Begley:So what you know the Department of Health and Human Services, or, you know, veterans Administration is concerned about is whether or not you've transferred assets so as to lower the amount of assets that you have in order to qualify for that benefit. Because, generally speaking, there's a threshold requirement. If you have too many assets that are not exempt, then it's going to prevent you from qualifying. So they don't want people just giving away assets in order to get qualified, and so there's a presumption that if you transferred any assets within a certain window of time before applying that, that transfer was done for the purposes of qualifying, and so you have to be able to rebut that presumption, to show that the transfer that was made was done for a reason other than trying to get qualified for that benefit, for that benefit. So that's a position that you typically don't want to have to be in, because it's kind of hard to prove. Hey, I gave this away because I just, you know, wanted my grandchild to have it, or I gave it away for some other purpose.
Brenton Begley:Now if you tend to give every year a certain amount of money to certain people or charities or organizations, then you know you can show that pattern and give it.
Brenton Begley:That's not necessarily going to trigger that look-back period or run afoul of the look-back period. But a transfer that you wouldn't have ordinarily made and if you don't receive equal value in return is going to be presumed to run afoul of the look-back period. And people then ask okay, well, what about this ability to give $19,000 per person per year, given the current law with regard to gift tax? And that's very different that's only for gifting for tax purposes. So for the gift tax reporting requirement, if you give over $19,000 per person per year you will have to report that okay to the IRS. But otherwise you wouldn't necessarily have to pay tax on it unless you've given over the estate and gift tax threshold. So that's kind of how those two things work. They get conflated quite a bit, but they're separate and distinct from one another. So if you're going to give a gift, it has to be thought thoroughly in regards to what it could do and how it could affect the possible look back period for some type of benefit that you're trying to qualify for?
Greg McIntyre:Sure, so so, yeah, so. So if I do that, I'm going to essentially penalize myself and have to cure that gift and give that money back and then do it the right way, right? Or do it a way that complies with the rules, even if it's that federal gift tax exemption per person per year, right?
Brenton Begley:Correct, yeah, just because it complies with the federal gift tax exemption doesn't necessarily mean it's going to comply with the look back period.
Greg McIntyre:So if I get my house out like to my kids, is that going to penalize me?
Brenton Begley:Certainly it'll penalize you. It'll penalize you where number one you're going to run afoul of the look back period, so you're going to violate that look back period. Whatever the value of the home is is essentially going to be the amount that you're sanctioned before Medicaid or VA will pay for your care. Number two you will likely have to report that because it's going to be over $19,000 per person per year. So there'll be a reporting requirement.
Brenton Begley:Number three there's also another tax implication that if you transfer the property as a gift during your life, you're giving your loved one that asset with all the built-in gains. So if they ever sell it, they're going to have much more capital gains on the property than if they would have inherited the property. So you know, when it comes to things like real property, you don't necessarily need to give it away to protect it. Property, you don't necessarily need to give it away to protect it. So you know you'd be much better served keeping it in your name, under your control for the rest of your life, but setting it up to make sure it passes in a way that Medicaid nor any other creditor come after that property.
Greg McIntyre:And there's so many other examples of how people will wrongfully violate the rules to disqualify themselves from a benefit. However, there is an answer and there is help with that. We know the rules inside and out and we work regularly on benefits cases and have for a long, long time and we help people make the right decisions whether it's a ladybird deed on the house and then how to deal with the movement of liquid assets under the rules that don't violate the rules that are allowed under the rules and we help you stay in compliance with the rules so that you can qualify for the benefit you so desperately need without sacrificing all your assets. Very rewarding part of my job and Brenton your job. Our job is to help individuals, couples, families protect assets, stay in control of assets and still stay open and qualified for long-term care benefits that will help pay for their care. So, in order to do that, we'd be glad to sit down with you and discuss it If you or a family member would like to discuss this estate planning or even in an emergency, where we can help you stay in control of the assets, stay open to qualify for long-term care benefits to pay for assisted living or nursing home care and not sacrifice those assets.
Greg McIntyre:We'd be glad to offer a free consult. You can call us at 1-888-999-6600 or schedule directly on our calendars with our attorneys at mcelderdahlcom scheduling and this is one of the most rewarding parts of our job, I guarantee it, and one of the most fun is to help people strategize under these rules that we know really well and we do even more. But wait, there's more. We actually handle the application, if one is needed, from beginning to end and we have some of the most knowledgeable paralegals and people in our industry that have trained and are committed to our clients to make that happen and just care a ton and are committed to our clients to make that happen and just care a ton. Their hearts are huge and they enjoy really helping families protect what they have and qualify for the care that they really greatly need. Give us a call, thanks.
Brenton Begley:Thanks.