Can my Mom change the name on her CD's to mine before it is up for renewal? - AgingCare.com

Can my Mom change the name on her CD's to mine before it is up for renewal?

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There are many reasons why transferring assets from an elder to an adult child or other person or entity might be considered, but there are always consequences, or potential consequences when doing so.

Certainly qualify for Medicaid is one of them as most states have adopted federal law which requires that most assets transferred by a Medicaid applicant within five years of application be considered as countable for eligibility purposes.

In the case of transfer to an individual it is important to creditor status. Understand that assets that are gifted to another become the property of the the donee and therefore become subject to the donee's creditors. We always ask before a gift is made if the donee has creditor issues, whether they are in a litigious provoking profession, or if their marriage is unstable to avoid unexpected diminution of the funds.

Income tax (gift tax is discussed below) may also be an issue in that any earnings generated by the asset transferred are now taxed at the the donee's highest marginal income tax rate. The difference can be appreciable. Many elders pay no taxes or are in very low tax brackets whereas an adult child may pay ordinary income tax rates of almost 50% (between federal, state, and sometimes city, income taxes).

One consequence that is NOT typically at issue, however, is gift tax. The Unified Federal Estate and Gift Tax exempts each individual from paying Federal Estate or Gift tax on the first $5.42 million dollars gifted or bequeathed to any other individual or entity (in 2015). Naturally, there are very few elders who have this kind of wealth and, therefore, there is no "gift tax" consequence when most gifts are made. (As an aside, in most cases gift tax returns and gift taxes, when due, are paid by the donor, not the donee).

In addition to the estate and gift tax exemption mentioned above, there is the "annual exclusion" which for 2015 $14,000 as it was for 2014. The annual exclusion permits each individual to gift up to $14,000 per year to as many individuals or entities as they wish without the gift being subject to gift and estate tax or the lifetime exemption.

Although there is never any tax due for gifts of up to $14,000 per year, a gift tax return may have to be filed for gifts over that amount even if there is no tax due (again, except in rare circumstances, this would be filed by the person making the gift, not the person receiving the gift).

Very important, too, is to not conflate Federal Estate and Gift Tax rules with Medicaid rules. For instance, I am often asked "Can't my mother gift her three children $14,000 each to qualify for Medicaid?" The answer is no as such a gift would indeed be a penalty inducing transfer for Medicaid eligibility purposes.

Before transferring anything that belongs to an elder you may wish to consult with a professional familiar with Medicaid, estate transfer, and income tax rules.
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Your banker would be able to tell you. Be aware that if she is trying to hide money from Medicaid, it wouldn't work. Plus, you may be liable for a hefty gift tax.
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She could. Then two things happen: 1. the IRS sees a large gift and taxes you on anything over the allowance for gifts. 2. Mom would be totally ineligible for Medicaid for the next 5-7 years, so you get all the Nursing Home bills.
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She could, but the above answers are correct. It can't be hidden, and depending on the amount, it could be taxed. I'm only assuming that she doesn't currently need the money, since she isn't going to just cash it in. If that is the case, she could add your name as POD (paid on death), meaning that it will transfer to you when she passes.
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But the POD would not pass to the beneficiary if there is money owed to a nursing home under Medicaid because of the MERSA or whatever it is called. Medicaid will always get their money somehow, if there is any money to be had.
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Hi PrettyGood, the CD will have to be spent (for the owner's care) before applying for Medicaid. The CD would be an asset. The POD will only be good if no other money is owed. I think you are thinking of MERP (Medicaid Estate Recovery Plan).
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thank you brendalynn for the correction,yes, you are right. I was in "life insurance beneficiary" mode (which would only be paid after death) (because my parents have a small life ins policy and they are changing their beneficiary to their church)
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