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

This CLE course 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.

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.