The kind of gifts that you’re permitted to provide each year according to tax law is very different than what is allowed under Medicaid. For an older or disabled person, Medicaid places some restrictions on how much money you can give, even to your children or heirs. Despite the changing regulations around Medicaid administration, the gift limitations are generally stable concerning their stipulations.
Understanding the rules
There are penalties if a Medicaid applicant were to make a gift in the five-year ‘look back’ period preceding their application. There are, however, some exceptions to this rule:
- Gifting your home to a child who was your caregiver: The child must live in your house as a caregiver for two years or more.
- Providing gifts or trusts to children who are disabled or minors: Trusts are typically used to transfer assets in this scenario. Minors, in this case, include children who are under 21. For children who are disabled (regardless of their age), gifts can maintain their care through a special needs trust.
Long-term planning for asset transfers
Advanced planning is the best way to make sure that you transfer your assets properly during the maintenance period before a Medicaid application. Whatever the size of your estate, it would help to have a lawyer experienced in estate planning and Medicaid planning to help you manage your assets before the eventuality of nursing home care.