AssetBuilder Inc. Registered Investment Advisor - Simple Investing. Smart Future.

Hello All,

 My parents are near retirement.  Both will be living on pensions and social security.  My parents have 300k in cash and retirement accounts.  What is the most efficient method to start transferring this cash to the heirs so that when/if the time comes this is not bled by a nursing home and medicare/aid can kick in. 

I know they can gift 10k per year to my brother, and my family (3 of us).  My wife and I are in the 35% bracket and my brother is at/near 25% fed income bracket.  Can they gift to my daughter (15 months) since she would be in the lowest income bracket?

 Are there any other issues I am missing?

 Thanks,

 Tyler

 You may want to review this information related to asset transfers and eligibility for Medicaid: 

http://www.virtuallawoffice.com/transfer.html

maybe I am just over-reacting to your query but it seems self-serving

if your parents want to know about early transfers of assets--why aren't they asking the question....

also if they are just at retirement age--there could be many years to sustain a whatever level they choose/can afford--penions and social security alone might not be enough to sustain their lifestyle and needs...many people have had their pensions reduced due to the actions of companies they were depending on when they declared bankruptcy or were bought out...

Scott has written about problems than develop in retirement planning and executing those plans...such as the latest on Medicare premiums---

maybe your parents would be better off to find some long-term care insurance so you don't have to worry about losing your inheritance

Tyler,

The biggest thing you are missing is the "look-back" provisions of Medicaid. If significant transfers have been made to others prior to applying for Medicaid, getting on Medicaid can be delayed for a significant period of time.

This is an arcane area and each state has somewhat regulations about transfers, etc. but it IS possible to make some transfers.

Some elder care attorneys, for instance, suggest creating a trust in which you claim no beneficial interest. Money can then be transferred to this trust on a monthly basis and accumulate there. Then, when the parents' assets are exhausted, they can apply for Medicaid and the trust can be used to pay for the many, many things that are not covered by Medicaid.

This is an extremely complicated area, full of traps. A visit to an elder care attorney would be a very wise next step. Failing to visit an elder care attorney would be very foolish.

Scott

Hi Scott and fellow responders,

Thank you very much for your thoughts and time.

 I think talking to an attorney is a good place to start.

 -Tyler