Understanding the Downside of Gift-Giving When You Need Long-Term Care Benefits

Posted on: Oct 21, 2015

For many people, giving gifts is one of the best ways we have to show love and gratitude to others. Who does not enjoy seeing the smile on someone’s face when you give them something that makes them happy?
Gift giving is an inherently selfless act that is almost universally considered a positive and beneficial action. However, if you need Medicaid help to pay for Long-Term Care, and you have given gifts like cash, stocks, bonds or real property to others within the past five years, this can have negative consequences when you want to qualify for benefits.
One of the things your Elder Law attorney will help you do during the Medicaid application process is to look at gifts you may have given in the past five years, known as the “look back” period. (This period was established by the Deficit Reduction Act of 2005.) Since Medicaid is intended to help pay for Long-Term Care for those who do not have the income or assets to pay for it themselves, the State will evaluate every aspect of your finances in order to determine your eligibility for benefits.
If you do have adequate income or assets, the State expects you to use them to pay for your Long-Term Care before you qualify for Medicaid benefits. This is where gifts you may have made are problematic. You may have given your grandson $5,000 on his high school graduation to help with college expenses. However, by law the State’s presumption is that you gave that $5,000 gift in order to spend your cash and qualify for Medicaid. Your Elder Law attorney will help you rebut this presumption. However, in some cases property or other gifts may have to be returned.
A common question we are asked at Elder Law Group is whether a senior should deed a home to an adult child to avoid the State’s lien if the State has paid Medicaid benefits. Doing so would be construed by the State as a gift unless you deeded the home more than five years ago. Further, a home is not a countable asset when applying for Medicaid benefits if it is in the name of the applicant. A home is also one of an Elder Law attorney’s best opportunities to help you preserve assets when you need Medicaid benefits. This is one of our many Medicaid Asset Preservation Strategies®.
Protecting your eligibility for Medicaid benefits and preserving your financial assets takes planning with an experienced and knowledgeable Elder Law attorney like those at Elder Law Group. Even if you are not currently in need, planning for the unexpected will ensure you will always be able secure Long-Term Care and preserve your estate. Please give us a call to learn more and start planning your Medicaid Asset Preservation Strategies®.

Article Categories