When gifting cash while living, it’s important to keep in mind potential tax liability for both the giver and the recipient. More importantly, as a giver ages Medicaid planning should also be taken into consideration. Currently, Medicaid has a five-year look-back period, when it considers an individual’s assets with their application for Medicaid. For example, while a particular gift may not require the filing of a gift tax form, the gift could still be counted as an asset of the giver in their Medicaid application, depending on how long it has been since that gift was made to the recipient. Gift taxes and Medicaid are important issues to remember in gifting.
Givers would be wise to seek the guidance of an attorney, so they can knowledgeably consider a range of options for their planned gifting that could help minimize tax obligations and lessen the impact on their potential, future Medicaid application.