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Elser is 92, has 120K in cash with full retirement (4k month)and social security (1k month) and own house outright. He wishes to give three childern some cash before he passes

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Sounds like he has $5,000/month income that he could use to pay for a care center (or in-home care) if he ever needs it. Is that sufficient in your area of the world? Does he also have ltc insurance? I think it is enough to make him ineligible for Medicaid whether he gives money away now or not. So maybe that is not so much an issue. But if the $5,000/mo is not enough, he may well wish he'd kept the $120,000 to supplement it.

I don't blame him for wanting to see his children benefit from his estate before he dies, but since it is so hard to predict what his future needs might be, that may not be the smartest move.

I suggest pricing out some care centers in his area, so you have some idea of what $5,000/mo will buy. And I suggest also consulting an attorney specializing in Elder Law if he still wants to give away some of his money, so it is done in ways that would have the least impact on his future.

igloo572, isn't Dad going to be ineligible for Medicaid based on his monthly income?
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You kinda have 2 different issues - the taxation issues with gifting $ which is all IRS or your states estate tax issues; & then Medicaid qualification and transfer penalty on assets gifted. IRS doesn't care as long as taxes are paid; ditto for estate taxes imposed by your state.

But Medicaid is a whole other story. At 92, that would mean he could not qualify for Medicaid to cover his care till he is 97 without a transfer penalty as Medicaid imposes a 5 year look-back on all assets. Now he could not ever need Medicaid. Could happen in theory, but I wouldn't count on it. What is likely is that he has a fall sometime in the near future, goes to the hospital and then to rehab within a skilled nursing facility/NH and then ends up staying in NH as going back home just isn't feasible. Really it could cost 250/300K to pay for the average NH stay of 2.5 years. Costs are pretty staggering. If his house is worth 200K, then it's sale and his savings could take him to private pay for care for 2.5 years.

Really try to look at what his needs may be before you start dividing out his funds. You know your parent best, what is his health like? Is he able to do for himself? Has he started having ADL issues and signs of dementia? Is his home functional for him right now and for the future? Are the costs & upkeep on the home manageable? Can you provide for 24/7 caregiving if need be? Most families end up placing the parents home for sale to be able to pay for care whether it's private pay or Medicaid paying, but if there is something about the house that makes sense for you all to keep the house, it can be done although family will need to pay for everything on the house if Dad goes onto Medicaid and then deal with MERP issues after Dad dies.

If you all get his $ now and then 2 years from now Dad needs NH care, he will be ineligible for Medicaid and someone in the family will have to take Dad into their home and become his full time caregiver OR family will have to private pay for his care @ the NH for whatever # of days the transfer penalty is set at. Really try to look at what his needs may be before you start dividing out his funds.
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Jeanne - yes your absolutely right that he would be based on most states 2K - 2,300K income max but often those with higher monthly income get a Miller Trust done and qualify for Medicaid by doing that. So transferring $ would be a problem.

It's just so tremendously expensive for NH. 120K is a good amount of $ to have saved & 5K a mo income is also a tidy income but really if they are on the east coast with 10-15K a month private pay costs, it will be gone in about a year. And then family will have to come up with 5 -7K to supplement his income to pay for his care. At 92, it's late to do very much "creative" for heirs planning I imagine. Dad really is going to need his funds for his care & needs. There's always something that can be done to spend-down in ways that benefit the person and a good elder law will have suggestions and should be consulted with.
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The hardest thing will be to convince him, he does not need to give his kids cash before he passes....it may be helpful to explain the utterly bitter ramifications of Medicaid benefit denial to him, as well as to.the kids. If any if the kids (or dad) is not wise enough to comprehend the situation, may e the poa should step in and prevent dad from jeopardizing his own future care. That is one of the jobs of the poa, after all, to safeguard the financial future of the principal.
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I looked it up online and the limit before gift taxing is $14,000 per person. I would check with whoever prepares your taxes to make sure for 2015.
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Bad idea, because if elder needs a nursing home, that amount would not last a year. Medicaid would impose a penalty.
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He can give a small amount away to his 3 kids, but should be prudent. He's 92 - he's got no mortgage, and it doesn't sound like he has any serious health issues, no mention of a living spouse of any dependents or debts, so why not? But, before he does so, he needs an elder law attorney to help formulate a plan for the gifting, so it's done properly and does not jeopardize his future potential Medicaid eligibility, just in case.
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