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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55598
Experience:  29 years of experience as a tax, real estate, and business attorney.
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My younger brother passed away in July 2012. His estate included

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My younger brother passed away in July 2012. His estate included roughly $113,000 in savings which my parents inherited as he did not list any beneficiaries. My parents would like to gift me with $50,000 from this estate. What would be the best way for them to pay this to me in light of Minnesota and Federal gift tax laws as well as consideration for their future longterm care needs?
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. Yes, you want to make the gift all in one year. Minnesota has a gift tax that goes into effect for gifts after 6.30.13, but the $50,000 would be under the exemption amount even if made after 6.30.13. In addition, the first $14,000 doesn't count because it is exempt under the annual gift exclusion. See: Under the Federal level, There should be no gift tax consequences. Recipients of gifts are not subject to gift tax. And, there should also be no gift tax due from the donor. Each donor can give $14,000 per year per person under the annual gift exclusion. In addition to that, for any amounts in excess of the $14,000 in a year, each person has a $5,250,000 lifetime exemption....which means a person can give a cumulative amount of up to $5,250,000 in gifts over and above the $14,000 annual gift exclusion amount without incurring gift tax....the donor must file a gift tax return to let the IRS know how much of the lifetime exemption is being used, but there will be no gift tax until cumulative additional gifts have exceeded the $5,250,000.

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Customer: replied 4 years ago.

Could you advise on how this could impact their financial plans for longterm care? thanks!


Hi there. There is a 5 year look back with regard to Medicaid eligibility for any transfers less than fair market value (i.e. gifts). Thus, the sooner they make gifts, the sooner the 5 year year period starts with respect to those gifts. Thus, gifts now will help their eligibility down the road.
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