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My grandparents are 81 years old, and my grandmother has Alzeimers and diabetes. Despite his careful planning, my grandfather never anticipated a long term illness that will require a nursing facility (at $6-8K per month). He knows that at that rate his assets will be depleted very quickly before Medicaid will inevitably take over. Because long-term care insurance is out of the question and Medicaid is inevitable, he wishes to pass on what he has now to his 3 daughters in annual $20,000 non-taxable gifts. I know Medicaid can look 3 years prior to assets sold below FMV, but can they look at these gifts (if in cash or stock) and penalize him?

The lookback includes gifts.

Your grandparents are in much the same boat as my parents were. Your grandfather needs to sit down with a lawyer who knows this stuff. Many states, perhaps all, have methods for splitting the couple's assets so that the spouse who doesn't need care isn't impoverished. There are also a number of expenses that can validly be paid from assets without objection from Medicaid. Since Medicaid is a joint Federal/state program, there will be variance from state to state.

There's help available to him, but he may have to do some digging to find it. A local council on aging, or some such program, could probably direct him, as could the local or national Alzheimer's association or AARP.

Best of luck to you all. If you haven't read Dave Braze's articles on long-term care, I'd advise you do. This is scary territory for everyone involved, and the more information you have the better off you'll be.

Phil Marti
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