Can a parent give a $13,000 gift to a child and not have that money count in a 5 year look back by the IRS?

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In MA you can give $13,000 each year to a child. What if a parent gives the gift and enters a nursing home. The parent pays nursing home costs for 2 years while, also, gifting 3 children $13,000 each year. Will the IRS "look back" and say that money needs to be used for nursing care?

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Pokagon - well this is a big gray area isn't it!. Mom can gift you whatever and those $ fall under IRS rules. But Medicaid looks at $ gifted or transferred differently and can do a transfer penalty based on the amount "gifted". What our attorney suggested was to get a "personal services contract" done and the $ paid via the contact is income and 1099 reportable. But by doing this it won't be an issue (or well it shouldn't be if the legal was done correctly) for Medicaid later on.
imho you kinda need to figure out how much you're looking at for an IRS penalty vs a Medicaid transfer penalty and which is worse or easier to deal with should it become an issue. Whatever the case, you really need legal done by an elder care or estate attorney. Good luck.
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But if your parent is paying you room and board (my mom has dementia) and if (maybe she had to go into a nursing home...her money runs out and Medicaid has to be applied for) can't they "get" me for not reporting this on my taxes each year as income?
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Frustratedtoo - October, 2017 would be 5 years from now and she'd be 97. Alot can happen in that period of time especially with health care issues and costs. My mom is mid90's and in a NH now for a couple of years. My experience is that if they live long enough, even if they had a good nest egg, they will eventually run out of money. Personally I'd stop with the gifting now as in the situation you all are in is such that her expenses are pretty transparent and easily reviewed and the gifting will be obvious if she ever need to apply for Medicaid. What you don't want to have happen is that say in 2015 she needs to go onto Medicaid and in the review they find she gifted 30K to grandchild for college/wedding/whatever and you as the person financially responsible have to make up the 30K to the NH asap for her to stay there. And say in 2015 your personal financial & health situation has changed dramatically that you can't easily do this. Total panic situation and you really don't want to be in a bind like this if it is preventable.
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Yes, only if expenses go up I suppose. Hopefully she will never have to apply but it's hard to say what the future will hold. I guess if she stops gifting now she will most likely be fine.
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frustrated2, if her monthly income is enough to be private pay, then under what circumstances might she need to apply for Medicaid? An increase in the cost of the NH? A need for more extensive care?

If she never has to apply for Medicaid, who would care what she did with her assets? But if she does have to apply, money that she's given away may draw a penalty. I know it is sad, but I think you should consult an elder care lawyer to see if small sums can be given and what the limits are.
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I was told by a Michigan elder care attorney, any savings (monies) could be placed in a streaming annuity for my Mom. If I can't physically, emotionally care for her and have to place her(she is very ill-dementia)...perhaps that could help keep everything she has from going to a nursing home.
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Does anyone know how this would go (I know I'd need to verify with an attorney, so I am asking if anyone has experience in this kind of a situation) if a) there is only one surviving spouse b) she has pensions, long term care and social security for life and c) she has about $120,000 on hand over and above the above and is 92, already in a nursing home that allows patients to move to Medicaid if they run out of money.
Her expenses monthly right now are right 'at' the income she receives from her items listed in (b) and she has sold her home and all other assets. If she spent her cash on hand she wouldn't have 'extras' unless we were to help her with those, but the only joy she finds in life now is doing a little something for others, which means gifting them money. I would think with what she has to take care of herself aside from her nest egg, this could not be perceived as spending down, but we would feel terrible for her if we advised her wrongly. Any thoughts?
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Good point made above about the IRS vs Medicaid. It is equivalent to the thought process in a divorce - the divorce decree may say that one spouse has to pay the mortgage and the other doesn't have to. But if both names are on the note, the mortgage is still the responsibility of BOTH. Bottom line, need to talk to an attorney.
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Yes, maggiemae, your mother can pay you rent, and also for the care you provide. Medicaid rules do not expect applicants to be able to live without paying their way. To make any future application go more smoothly it is a good idea to have written documentation of the rent arrangement or the personal care agreement.
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My mother lives with me. Can she pay me rent, as I am retired and the rent would help with the cost of food, utilities etc., and not have that money count against the 5 year look back period? We live in NH.
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