My wife's parents live with us and her mother has Alzheimers. We will probably be putting her in a home within a year. I suggested that the father gift $13,000 to each of his foutr children which by IRS regulations he is entitled to do so. The family is concerned that this may cause a problem with Medicare or Medicaid when they put the mother in a home. Would they consider that as trying to hide funds even though it is allowed by federal law.
2 Answers from Attorneys
Federal law regarding taxation of gifts and Federal law regarding Medicaid are two different things. Just because you can make a tax-free gift doesn't mean that it will be permitted by Medicaid rules. So, it is possible that Medicaid would regard the gifts as attempt to hide assets.
The father may be entitled to make a gift ,as Medicaid does not consider the income of the other spouse, though they will look at the overall assets. It's not clear where those funds are coming from and whose they are. There are other things that can be done, if the effort is to qualify for Medicaid without having a horrific spenddown to make. One thing is certain: You need to speak with an attorney about it before you do anything. It is quite possible that such a gift would be deemed a transfer of assets which, while not necessarily disqualifying her for Medicaid, could affect the level of income/assets to which they attribute to her in the process.
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