Closing proceeds /gift

Forum|Forum|7 years ago
June 5, 2019
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Opus 17

Level 15

So the big problem is this: If a person gives away their property or money to make themselves "poor enough" to qualify for government help with assisted living, the government can, in some cases, go after or "claw back" those gifts.

So for example, a person needs to sell their home and go into assisted living. The house profits of $100,000 goes into their bank account. Their pension and social security are not enough to pay the assisted living expenses so they apply to Medicaid to cover the difference. Medicaid says you don't qualify unless you have $3000 or less in the bank. The person says, I'll be darned if I spend all my house profits on medical care, so I'll give away $97,000 to my family, then I will qualify for Medicaid. In some cases, Medicaid can take those gifts back from the recipients.

Trusts can be used to safeguard assets from Medicaid, but they have to be done properly.

To your original question, any gift from your mother is not taxable income.

However, it may be subject to confiscation (partial or total) depending on the circumstances. Your family needs the help of an attorney who works with elder law issues (if the home was in a trust, you may already have an attorney involved, who can easily explain your position to you.)

Good luck.

st-josephAuthor

Level 2

Thank you. My mother have a long time CPA and attorney and I am just now remembering a meeting we had with all over 8 years ago and they got her covered. She is a WW2 veteran and was stationed at Los Alamo Lab in New Mexico where they made the first nuclear bomb. She is not the type to 'cheat' no matter what. When times are tough she always 'bite the bullet' and tough through it. She is all taking care of. It is I I am worrying more about because I am on social security disability and Medicaid myself. I did report to social security office immediately in person at their office and they said it is a 'gift' and to do whatever I want to do with it. It is not money that I earned or work for they said. As for Medicaid, they told me I would only need to report this annually during ReDe, not in between to report any changes in income or life changes. I just don't know how Medicaid is going to look at this on my next ReDe. I am only 54 and recently went on disability a few months. I just keep track of my spending with what I used the money for like buying a electric scooter for me, new analog hearing aids for me(born deaf), braces for my daughter, fix up my car with numerous repairs, fix up our home, donated to a few charities. and what not. My belief is they might just ask me how I spent the money. I also feel if in my guts I feel something is wrong then I need to worry. If nothing and I feel I am doing everything I should be doing and pleasing to Medicaid and social security with how I spend the money then I am okay with that. After all, why should a person be punished for receiving a gift from a parent, you know? Thank you again.