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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? I've looked over your Medicaid articles and scoured the HCFA website to no avail. Can anyone help or direct me to the right place?
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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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<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.>


I think you got some good advice from Phil. Unfortunately, it does not look like there was very much careful planning in this situation, which is not unusual. At the very least, your grandfather should have 250k to cover 3 years of NH expenses before he could even think of gifting anything to his children. More importantly, his plan should not forget about his own financial needs for his normal living expenses. There are a good many complexities in these cases. In addition to legal advice, he could benefit from talking to a good tax pro.

BTW, I apologize if this sounds wrong, but I hope your grandfather is the one initiating all of this. He could be very vulnerable in his condition and anxious daughters attempting to save "their" inheritance could easily cloud his judgement. If he has decided to make some changes now, they should be done very carefully. Changing titles on any property could have some serious tax consequences later.

If the diabetes that your grandmother has is being properly treated and she is otherwise strong physically, she can survive for many more years. Trying to care for an alzheimer patient at home often causes much more harm to the caregiver, both pysically and emotionally. Make sure that your grandfather is not carrying too heavy of a load during these difficult times. Good luck.


BRG
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Let me rant on this subject again. Your grandfather is obligated to spend that money on himself or his wife IMO. Asking taxpayers to foot the bill and give his money to others is immoral IMO. When he has spent down to the level required by law then as a taxpayer I am willing to help out. But, if you or anyone else hides assets or receives them to skirt the law they should be sent to jail.
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<if you or anyone else hides assets or receives them to skirt the law they should be sent to jail.>

Very unfair "rant".

I don't think eaa2315 is talking about "skirting the law" here. Instead I think he/she is trying to get ideas to work within the law to protect Grandfathers assets. Big difference!

I wonder how you would react, in similar circumstances, to protect a life-time of work to provide for retirement, only to face the possibility economic ruin.

I feel for Grandfather. There, but for the grace of God, go anyone of us.

Sam

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Life is unfair. So what? I was referring to the letter of the law but also feel that personal responsibility is required by us all. What is this money for if not to care for grandma? Why is it up to taxpayers to fund someone's gifts to their offspring? I say again if you got it, use for the nursing home till it's gone! Then as a taxpayer I will help.
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I'm going to take one more crack at this thread. If I get flamed, so be it.

All too often, I see comments about retirees unfortunate circumstances, such as-- Life is unfair-- So what?-- Spend down the nest-egg until it's gone-- in effect, reduce them to pauper status-- then maybe we as tax payers will help.

I think there's another way to look at such problems.

As a tax payer myself, I would prefer to leave a couple with a moderate nest egg, and help them pay the temporary excessive medical cost up front.

Why? Because, in doing so, you still allow that person self support for the rest of their lives, rather that making them wards of the state. This is not to mention their dignity and self respect as members of society.

I would not deny them my few pennies, which help make up the billions in government coffers. It has been and will continue to be spent in much worse ways.

Sam
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Imoral? You have got to be kidding?
This is a bad law. Find the loophole and use it with clear consence.
On this merry-go-round every one comes to full circle. My taxes help your dad. Your taxes will help me. I would rather have my taxes help an fellow aging senior preserve some dignity than have my money given out for a politicaly motivated what-a-good-boy-am-I rebate.
go for it.
rrarm
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A dilema for thought------2 people-1st person works hard saves lots of their income,perhaps goes without luxury items,vacations,etc.,retires with comfortable sum just as they had planned,-2nd person works little,saves little,lives for today,----both get illness in later years,2nd person gets gov't coverage now ,1st person now has to spend all their savings before gov't coverage,also both could end up in same room getting same treatment,one private pay ,one gov't-----hmmm
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Hi cobi & rrarm

I am with you regarding this subject----BTW----rrarm great first post





Cobi------"A dilema for thought------2 people-1st person works hard saves lots of
their income,perhaps goes without luxury items,vacations,etc.,retires with comfortable sum just as they had planned,-2nd person works little,saves little,lives for today,----both get illness in later years,2nd person gets gov't coverage now ,1st person now has to spend all their savings before gov't coverage,also both could end up in same room getting same treatment,one private pay ,one gov't-----hmmm moral? You have got to be kidding?"



rrarm---"This is a bad law. Find the loophole and use it with clear consence.
On this merry-go-round every one comes to full circle. My taxes help your dad. Your taxes will help me. I would rather have my taxes help an fellow aging senior preserve some dignity than have my money given out for a politicaly motivated what-a-good-boy-am-I rebate.
go for it."
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I find this a very useful thread for this board. There has been a lot of compassion expressed. Perhaps those without compassion have not encountered a close personal experience in their families.

I strongly feel that Grandparents should look for/dig into all the help they can get within the law.

Charlotte
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