Legal Question in Wills and Trusts in Ohio

Re: gift of money

This is a complicated question because of the many issues it raises.

Your grandfather can give up to $12,000 per year to as many persons as he chooses, relative or not. He will not have to file a gift tax return unless he exceeds the limit to one person in any one year or his total gifts exceed one million dollars. Even if the annual exclusion is exceeded, no tax is due until total gifts exceed one million dollars.

He can exceed the annual limit by making payment for medical or educational expenses directly to the provider on behalf of another person, and with gifts to a charity or to a political party for its use.

The problem to consider is the gift rules do not apply to Medicaid. A gift permissible by the IRS is considered a transfer without consideration for Medicaid purposes, and will disqualify your grandfather from assistance if he enters a nursing home. If his plan is to give away his money so it will not go to pay for his care in a nursing home, he would have to avoid applying for Medicaid for five years after the gifts are made.