Nursing Home-IRS Gift Tax Rule
Q.I know that this is slightly off topic, but I think it's close enough that it will pass muster. My aunt and uncle are going to a nursing home soon. Both are old and at the point where they need nursing home care. They have substantial assets (I don't have a number). I know that there's a 5 year lookback for gifting and accept that. There's probably enough income from their assets to cover the nursing home without touching their nest egg, but I am not yet sure of this. ANyway, that's not relevant to my question. My question is can they still gift $10,000 per person per year like the IRS tax rule or will this $10,000 per person per year be considered during the "lookback"? I would bet you can't do it (and qualify for Medicaid until that $10,000 is accounted for as "spendable") but want to be sure that they are not missing an opportunity to pass even small amounts of money legally.
A.Sure it is part of the lookback. Further, if they themselves do not make the gift, but the gift is made by someone with their durable Power of Attorney, be quite sure the POA explicitly grants the power to make gifts to anyone including the person exercising the power, and be sure state law permits this Part of what should be done now is to prepay funeral expenses and burial plots, and be sure the contracts for thee are not cancelable. That may be true from a Medicaid standpoint, but IIRC, you didn't think Medicaid was going to be necessary. There may be some estate planning value to curent gifts, depending on the level of their assets.
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