Contact us for a Free Initial Consultation 414-253-8500

Heritage Law Office Blog

Medicaid and the Risk of Gift Giving

Posted by Brad Sarkauskas | May 08, 2019 | 0 Comments

Many seniors enjoy the opportunity to be generous to their children by gifting them monetarily. In certain circumstances, however, there is a real concern that people who may be in need of long-term nursing care in the near future should not give gifts. It can be complicated trying to adequately plan for long-term care and consider gifting. Our firm guides clients through the planning and gifting process. 

The Medicaid Rule on Gift Giving

For Medicaid to cover the huge expense of nursing-home care, seniors must show that they own nothing more than around $2,000. And they must also show that they have not given away money or assets over the prior five years (2.5 years in California). That Medicaid rule – the “look-back period” or the “transfer penalty” – would charge that senior for their generosity. Depending on the size and number of the gifts, the penalty could be substantial. 

Medicaid Law vs Tax Law 

Many wrongly think that there is no penalty for gifts of up to around $15,000 annually. That misunderstanding confuses tax law with Medicaid law. The Medicaid rules are entirely different from the tax rules. In the Medicaid context, gifts of any amount that are given during the look-back period can be penalized.  There are exceptions including gifts to spouses and siblings under certain circumstances, disabled children, and children who are caregivers and who live at home with the elder for a span of time. But overall, gifts and Medicaid do not belong together.

 The Importance of Consulting an Attorney 

The Medicaid rules are complicated and the consequences for mistakes can be very costly. There are a number of options to protect assets and still qualify for benefits, but these options must be weighed with great care. This is why it's best to consult attorneys who are experts in Medicaid law. Contact our Milwaukee office today for more information on long-term care planning, Medicaid and gifting.

About the Author

Brad Sarkauskas

As the founding member of the Heritage Law Office of Wisconsin, LLC, attorney Brad Sarkauskas is equipped with the tools--through his extensive background in finance--to effectively represent his clients legal economic interests. With over 20 years of experience in finance, insurance, and taxati...


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Contact Us Today

For a comprehensive plan that will meet your needs or the needs of a loved one, contact us today. Located in Downtown Milwaukee, we proudly provide legal advice to those in Milwaukee County and surrounding communities.