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Gifting money prior to nursing home. Should I give it away?

Many parents plan to give things to their children in their Wills. As we live longer, with an increasing number of chronic conditions, we may be tempted to give things away while our hands are still warm. This is particularly true if a child provides us with care – or promises to. We can leave our home and our car through an instrument which transfers it free of Medicaid estate recovery. But we may want to leave more.

Given that about half of us will need long term care and, in Texas, 92% of us will need help from our fellow taxpayers (Medicaid) to pay for care within six months of entering a nursing home, this simply may not work.

Anything given away, or transferred for less than fair market value, in the five years before we apply for Medicaid or the three years we apply for VA benefits, delays our eligibility. If the kids can give back the gift, fine. But what if they cannot? The county DA may charge them – and any attorney who documents or facilitates such a gift — with exploiting an elderly person. In Texas, this is a first degree felony. The state attorney general may charge them with Medicaid fraud. And who will pay for our nursing home care?

If we lack legal capacity, which with the rise of dementia may be the case for half of us in a nursing home, we do not have the ability to make a gift.

If our Durable Power of Attorney gives our agent gifting powers, is that agent really putting our interests first in making a gift? Specific gifting powers have long been required in Texas. Gouldy v Metcalf, 12 SW 830 (Tex 1889). Even if the document contains specific gifting powers, the gift cannot be something which would affect our qualification for Medicaid.

Often, the agent is a child who wants to make gifts to himself or other children. The parent and other members of the family may think this is a good idea, but it can have disastrous results for everyone.

A material legacy beyond the family homestead and a car may not be possible.

But there are more important legacies.

 

Elder law attorney, Terry Garrett, is a member of the National Academy of Elder Law Attorneys and is active in the Texas and Austin Bar Associations. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.

She assists families of people with special needs, people planning for the retirement years and people administering estates.

 

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