In this Elder Law Minute, Kaye Dent explains how the Medicaid look-back period commonly affects older people who are helping out their children, but DCEL can help you establish a plan to take care of your family without hurting yourself.
Video Transcript:
Hi, I’m Kaye DeSelms Dent with Dent Coulson Elder Law. Here with an elder law minute for you. These videos are intended to educate you about the Elder Care Journey, which begins earlier in life than you might think. We hope that you find them useful, and if you have further questions, please call us at Dent Coulson Elder Law.
It’s very common for people as they age to want to give their adult children gifts. A lot of times, they’re basing this on the annual gift tax exclusion, and there’s a whole discussion we can have about that. I believe there’s an old elder law minute about that. Probably Wes and I have each done one. But today, I want to talk about a more basic, upfront piece of it that when you start giving away money without a bigger plan around it, you might be doing yourself a disservice.
And what we commonly see in our practice because we counsel people so often about the cost of long-term care is that Mom and Dad or one gave some money away to the kids last year, maybe gave them each fifteen thousand dollars or whatever the limit was for that given year, and didn’t stop to realize, ‘Hey, I’m slowing down and I may need nursing home care in the next few years.’ If Mom or Dad needs nursing home care within five years of making that gift and needs to apply for Medicaid assistance, which is very common, it’s not a bad thing, there’s a five-year look back with the Medicaid application.
And what that means is that when you apply for Medicaid assistance for long-term care in Illinois, the state says that’s great, but we’re going to look back five years into your financial history, and if you’ve given anything away or sold it for less than what it’s worth, so selling your car to your grandkid for a dollar, you’re going to be penalized dollar for dollar for that, and we’re going to make you pay for your care for those dollars before we, the state, step in and start assisting with your care.
So, this is a very important issue, and if you’re going to be making significant gifts to your adult children and/or grandchildren, you want to have a plan for the back end about how this might affect your future. As a side note, frankly, my former law partner and my husband, Roy Dent, was a bankruptcy attorney in this area, and he would consistently tell me one of the biggest problems he saw in his bankruptcy with older people was that they had helped their kids too much to their own detriment.
There’s sometimes that direct detriment of ‘I’ve given away too much money,’ and then there’s that indirect, kind of sneak up on you detriment where you don’t realize that it’s going to come back and bite you on a Medicaid application if you have a stroke or a fall or develop dementia and need nursing home care.
If you want to have a better plan, a more comprehensive plan about how to do things for your family that you want to do and also take care of yourself later on, come see us at Dent Coulson Elder Law. We can help you do both. It’s not illegal to do both, it’s not. Um, there’s nothing wrong with wanting to help your kids, but don’t do it to the point that you hurt yourself.
Thank you.
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“Your Trusted Advisor on the Elder Care Journey”
Dent-Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Dent-Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (618) 632-7000 (IL) or (314) 567-9292 (MO), or Contact Us and we will get in touch as soon as possible.
