Medicaid Planning: Pros and Cons of Gifting the House Under Current Tax Law

Eligibility Rules, Gift and Capital Gains Tax Implications, Trust Drafting Issues, and Gifting Alternatives

Note: CPE credit is not offered on this program

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, June 24, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will explain and analyze the complex issues facing counsel when advising elderly clients regarding gifting their house. The panel will discuss Medicaid eligibility and gifting rules, tax implications, transfers to a trust, pros and cons of an outright gift, and alternatives to gifting.

Description

Elderly clients often consider gifting their house to their children. Under Medicaid laws, transferring ownership of a home, usually in the form of a gift, is subject to the look-back period unless an exception applies. Elder law counsel must structure the gift of a residence to avoid risking Medicaid eligibility or minimize a penalty that will be assessed.

Other considerations when structuring the gift of a home include liability for gift and capital gains tax, and whether to set up the gift as an outright gift or transfer to a trust. Besides protecting real estate from a potential Medicaid spend-down, irrevocable income-only trusts may offer tax advantages, as well as asset protection if the trust beneficiaries are sued or become subject to a divorce proceeding.

Counsel must understand the pros and cons of retaining a life estate in the residence. Counsel must know and consider the alternatives to gifting the home.

Listen as our authoritative panel of practitioners guides you through the complexities and considerations for a senior client wishing to transfer a house to the children. The panel will discuss Medicaid eligibility and gifting rules, gift and capital gains tax implications, ways to structure the gift, and alternatives to gifting.

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Outline

  1. Medicaid eligibility and gifting rules
    1. Functional eligibility
    2. Asset limitations
    3. Impact of gifting and look-back period
    4. Individual vs. married couple
  2. Gift tax
    1. Annual exemption
    2. Impact on estate tax exemption
    3. Tax filing requirements
  3. Capital gains tax
    1. Determining tax basis
    2. Who gets the capital gains tax exemption?
    3. Estimating capital gains tax liability
  4. Outright gift?
    1. Pros
    2. Cons
  5. Transfer to a trust?
    1. Pros
    2. Cons
    3. Trust drafting requirements
  6. Retain life estate?
    1. Definition of "life use"
    2. Pros
    3. Cons: clients maintain a valued ownership; will the state force the children to be landlords someday?
  7. Alternatives to gifting the house

Benefits

The panel will review these and other key issues:

  • In what situations should elderly clients gift their house to their children outright versus setting up a trust?
  • What are the key tax issues to understand and consider when senior clients want to gift the residence?
  • What issues should counsel consider to maintain Medicaid eligibility for their clients?

Faculty

Gannott, Kelly
Kelly Gannott

Attorney
Kentucky ElderLaw

Ms. Gannott assists older clients, their children and other family members with Nursing Home, Medicaid, asset...  |  Read More

Keenan, Michael
Michael J. Keenan

Attorney
Keenan Law

Mr. Keenan specializes in elder law, estate planning, special needs trusts and probate law. He has written...  |  Read More

Vantrease, Misty
Misty Clark Vantrease

Attorney
Kentucky ElderLaw

Ms. Vantrease assists older clients, their children and other family members, with Nursing Home, Medicaid,...  |  Read More

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