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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55278
Experience:  29 years of experience as a tax, real estate, and business attorney.
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9o year old Father in law was told by son that he should set

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9o year old Father in law was told by son that he should set aside 5 years of nursing home costs ..............50,000 for extra cash and then start disbursing moneys to his 3 children at the maximum possible(12,000) so that they can avoid tax implications. He said his lawyer told him that. Is this sound advice. I know there is a 5 year look back rule so it sounds about right to my wife and I but I wanted another opinion.
Submitted: 1 year ago.
Category: Tax
Expert:  Richard replied 1 year ago.

Hi there. My name is ***** ***** I look forward to helping you.

There is indeed a 5-year lookback period so any gifts made during the five year period will impact his eligibility. Thus, if 5 years of nursing care costs are set aside, then he would be set for 5 years and could get beyond the 5 year period even if he had to needed nursing care today. But, he's not limited by the annual gift exclusion amount..which by the way is now $14,000/year, not $12,000. In addition to the annual exclusion gift allowance per doneet, for any amounts in excess of the $14,000 in a year, each person has a $5,430,000 lifetime exemption....which means a person can give a cumulative amount of up to $5,430,000 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 $5,430,000.

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