Apr 02, 2014
By Rick Law of Law Elder Law, Estate Planning and Elder Law Attorney in Western Chicagoland
It is no secret that senior citizens are the wealthiest segment of the U.S. population. Much has been written and said about the trillions of dollars that will “change generational hands” as the current seniors pass their wealth to their children and grandchildren. Unfortunately, seniors have to contend with a dirty little secret that was put in place by the Deficit Reduction Act of 2005 (DRA).
The DRA made changes in the way that the government will punish seniors for acts of both charity and giving. First, remember that Medicare will not pay for the costs of long-term care in a nursing home. The only program that will help seniors pay for long-term care is Medicaid.
Medicaid rules presume when a senior makes donation to a charity or gives a gift to a family member anytime in the five year period before applying for assistance, the senior was attempting to get rid of excess assets in order to qualify for assistance with nursing home expenses. That’s right – seniors are guilty until proven innocent. The burden of proof is on the senior to show that when they gave money to their church or to their child, they had some other reason for giving the gift other than to qualify for long-term care help under the Medicaid program.
This DRA rule creates a cruel penalty of ineligibility for Medicaid services if and when a senior who gave away money needs nursing home services at any time within five years after the gift.
As long as this law is in place, seniors must remember that the IRS gift tax rule allowing gifting up to $13,000 tax-free is only a tax rule. Giving away $13,000 may cause a senior to suffer a loss in nursing home coverage of two to three months if they need assistance within 60 months after giving that money away. Thanks to the DRA, giving may now be hazardous to your health (care)!
Too many families needlessly lose everything they have. Don’t let that be you. Give our office a call at 630-585-5200 or 800-310-3100. Your first consultation is absolutely free. We’ll let you know what steps you need to take, right now, to protect yourself and your family. Call now, because when you’re out of money, you’re out of options!
Rick L. Law, Attorney, Estate Planner for Retirees.
Rick was named the #1 Illinois elder law estate planning attorney for the past 3 years by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future. Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.
“We would be lost without Law Elder Law! We walked in their doors over a year ago feeling lost and confused. With a father/father-in-law suffering from Alzheimer’s, we were overwhelmed by the Medicaid process, selling his home, protecting the assets he worked for his entire life, and finding him a memory-care facility that we could trust as his new home.
Law Elder Law helped with all of it! From the minute we walked out of our first meeting, we knew we (and he) were in good hands. We could not have possibly navigated all that had to be done without their expertise.”
A.M., Client of Law Hesselbaum and Law Elder Law