8/8/2009
One simple way you can reduce estate taxes or shelter assets in order to achieve Medicaid eligibility is to give some or all of your estate to your children (or anyone else) during their lives in the form of gifts. Certain rules apply, however. There is no actual limit on how much you may give during your lifetime. But if you give any individual more than $13,000 (in 2009 and 2010) ($12,000 in 2008), you must file a gift tax return reporting the gift to the IRS. Also, the amount above $13,000 will be counted against a $1 million lifetime tax exclusion for gifts. Each dollar of gift above $1 million reduces the amount that can be transferred tax-free in your estate.
The $13,000 figure is an exclusion from the gift tax reporting requirement. You may give $13,000 to each of your children, their spouses, and your grandchildren (or to anyone else you choose) each year without reporting these gifts to the IRS. In addition, if you're married, your spouse can duplicate these gifts. For example, a married couple with four children can give away up to $96,000 in 2008 and $104,000 in 2009 and 2010 with no gift tax implications. In addition, the gifts will not count as taxable income to your children (although the earnings on the gifts if they are invested will be taxed). For more on gifting, see our affiliated web site, Elder Law Answers, click Gifts to Grandchildren.
Warning: Annual gifting may impact your Medicaid planning. Consult your elder law attorney before gifting!
Centrally Located in Brighton
near Cobbs Hill:
1399 Monroe Avenue,
Rochester, NY 14618
Map & Directions
Subscribe now and get our FREE Guide, "The Top Eight Mistakes People Make with Medicaid Qualification"
Rochester Elder Law
All Rights Reserved
Legal Disclaimer: The information on this website is for general purposes only and is not legal advice. Content may change without notice. Please consult an attorney for guidance on your specific situation. Contacting us does not establish an attorney-client relationship. Do not send confidential information until a formal attorney-client relationship is established. This site may contain attorney advertising. Prior results do not guarantee similar outcomes. By using this site, you agree to this disclaimer.