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Regarding federal estate tax, currently there are none due for estates under 2 million dollars and the amount is increasing each year by law. Your state may have estate taxes.
Regarding the other issue..here is a summary:
Some day your may need Medicaid for nursing home care or home care benefits. If she is still the owner of assets, subject to certain exemptions (cash she can keep, etc.) Medicaid will force her to assume the bills up to the value of her assets before it starts paying, If she transfers tihem now, she MAY not have that problem. Here's why I say MAY: Medicaid has a 3 year "look back" rule.(5 years for trusts) That means that at the time Medicaid is applied for, they look back and see if any assets were disposed of FOR LESS THAN FAIR CONSIDERATION (market value). If there are such transfers, they presume that the transfer was made in order to render the applicant Medicaid eligible unless proven otherwise by the applicant. If mom changed title to the assets today, 3 years would have to pass before she made a Medicaid application without their looking back. Stated another way, if she made the transfers today and needed Medicaid next year, they would take the house.
Sorry....it's up to the Medicaid official case by case:
DOCUMENTATION OF RESOURCES
Checking and Savings Accounts The applicant must produce current checking and savings account statements showing balances as well as names on the accounts. Some counties require the applicant to provide statements for the 60 months prior to application in order to identify any transfers or gifts. Accounts closed in the 60months prior to the Medicaid application must have documentation of the account being closed. Documentation is also required to provide a paper trail of the disposition of funds. All funds in a joint account are presumed to be the resource of the applicant. Evidence must be furnished if this is not the case. A written statement from all account holders must be submitted with the application. It must include: Who owns the funds.
Why there is a joint account.
Documentation of who made deposits and withdrawals and how withdrawals have been spent.
Documentation of account records showing title on the account, and deposits made at the time the account
Example of a case that went against the person in your position:
Mom has just entered the nursing home, and her children have consulted with an elder law attorney, who asks about Mom's "countable assets." These are the assets that Medicaid counts in determining her eligibility for Medicaid nursing home benefits. A person who has more than $2000 in countable assets, such as bank accounts, mutual funds, certificates of deposit, and the like, is not eligible for benefits.
Mom has a $50,000 certificate of deposit, says Daughter, but "my name is XXXXX XXXXX XX too," she says. It's exempt, right? Isn't Mom eligible for Medicaid?
A similar argument was made in a recent Pennsylvania case. On September 5, 1983, Dora Steinberg's husband died, and their jointly held assets became her property. On December 14, 1983, Dora opened a joint account at the bank with her son George and her daughter Marsha. Dora, Marsha, and George signed a joint account agreement with right of survivorship that allowed any of the three signers to the account to withdraw any and all funds from it. The account's opening balance was $120,000.
By December 1994, the account had grown to $240,000. In January 1995, George and Marsha withdrew $199,608 leaving a balance of approximately $41,513.
On July 10, 1995, Dora was admitted to the Saunders House Nursing Home. On January 9, 1997, Dora applied for Medicaid, but her application was denied on the basis that the $199,608 had been transferred from Dora's ownership without fair consideration.
George testified that at the time Dora opened the account and named her two children as joint owners, she made a gift of $40,000 to each of them.
>>>>>>>>>>>>>>>>>>The Commonwealth Court of Pennsylvania upheld the Medicaid hearing officer's finding that George's testimony lacked credibility, and that he and Marsha withdrew the money in order to qualify Dora for Medicaid.
Case is Steinberg v. Department of Public Welfare, September 12, 2000.
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