The Federal Governments Self Contradiction on Gifts

I cannot count the number of times that I have heard this phrase, “ … then, we got a denial from HHSC, they said that Mom is ineligible because of gifts, but all of our gifts were under the $14,000 limit.”  I hear this phrase because people do not understand that there is no unified, organized, one size fits all rule under federal law that applies to gifts.

Specifically, the tax code has two completely different definitions of what a gift is.  The Social Security Code has yet a third.  So, when someone reads or hears the statement, “you can give away up to $14,000 tax free” they are only right under one of those three different laws.  Moreover, they are completely incorrect about the law that applies to Medicaid benefits for Nursing Home care.

The takeaway from all of this is that unless you happen to have a good long term care insurance policy, anyone over the age of 65 should seek out competent Elder Law advice before making any gifts or uncompensated transfers.  And, gifts have been made within 5 years before an admission to nursing home care, do not just file an application for benefits without first seeking out an Elder Law Attorney to help.

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