I Want to Give My Children More Than $13,000 Per Year but Then Something-or-Other Happens with My Taxes.
November 14, 2012
Yes and no. As with many areas where money and law intersect, it all depends on your goal. Let’s clear up a few things.
1. What is the $13,000 rule anyway? You can give up to $13,000 per person, anyone, not just your family, per year, without paying any gift taxes and without this affecting your estate taxes when you die. In other words, you can give up to $13,000 per person with no gift tax or estate tax implications. You can also give away more than $13,000, but just be sure to talk to your CPA about whether that would be a good idea for you. P.S. That figure is set to rise to $14,000 in 2013.
2. But are you really in a position to give money away? It costs a lot of money to get old in this country. As you age, if you want to stay at home or maybe move to assisted living but stay out of a nursing home, then you will need to use your own savings for your care. I can help you explore veterans’ benefits and MassHealth benefits for non-nursing home care, but even with these you will need to rely on your own savings. I am not a big fan of parents gifting money to kids. Keep your money. You will need it to stay out of a nursing home.
3. Doesn’t Medicaid let me give $13,000 to each of my kids and then get nursing home care? No. The $13,000 gift rule and the Medicaid nursing home rules have absolutely nothing to do with each other and were written for entirely different populations. If you gift money to your family and then within the next five years ask Medicaid (MassHealth) to pay your nursing home bill, they won’t. Even if you have a history of giving money to your children, as you age you need to reconsider this. Perhaps this is the year to tell your kids that the gifts will stop coming. If you feel a bit guilty about this, keep in mind that by keeping your savings intact, then down the road you will be in a position to hire help, making things a little bit easier for your kids.
Another Good Reason to Buy Long-Term Care Insurance
November 1, 2012
I talk to a lot of my clients about buying long-term care insurance (LTCI). Many people come to my office asking about “nursing home planning” – how to make sure they don’t use up all of their savings if they end up in a nursing home. And my response is always, “Your nursing home planning is to stay out of a nursing home.” And one key piece to keeping people in their homes with care, and out of the nursing home, is to have LTCI.
After seven long years of advocacy by MassNAELA (that’s the Massachusetts Chapter of the National Academy of Elder Law Attorneys), yesterday Governor Patrick signed a bill that makes LTCI an even better bet for seniors.
Until now, if seniors were lucky enough to have LTCI, they could of course use the policy to pay for care in their homes. But – they’ve had to keep a careful eye on how much of the policy they were using up at home. When home care is no longer medically viable, and the senior needs to go to the nursing home, then the LTCI would protect the value of their home from the cost of nursing home care – but only if they entered the nursing home with a certain amount of money still in the policy. This had the effect of either (1) forcing seniors to leave their homes before they wanted to, or (2) staying at home longer and using up the policy benefits, finally going to nursing home, and losing the house to the cost of nursing home care.
Now things will be different – and better. If a senior has a LTCI policy that meets MassHealth standards at the time of purchase, then she can use as much of that policy as she wants to stay in her own home for as long as she safely can. Then, if she ever needs to move to a nursing home, no matter how little benefit is left in the policy, her home will still be sheltered from the cost of nursing home care. This will help seniors stay at home longer, and will keep MassHealth’s costs down. A win-win for seniors and MassHealth.