How does the gift trust work when trying to spend down to be Medicaid eligible?

That"s for Federal Inheritances purposes only. Medicaid will look at $12,000 gifting as you trying to hide the money. Anything gifted within 5 years you will be penalized for.

I am not an attorney and suggest you seek legal advice. From my understanding, a person is allowed up to $12,000? max to gift to a relative each year in order to begin qualifying for Medicaid. Anything beyond that value amount you get penalized for when they begin to "look back" at the disposal of assets for up to five years.