Gifting Money Is The Easiest Way to Move Assets

Gifting money seems like a pretty simple act, on the face of it: you have some money, you give it to someone else, and then they have it. But like most things, there comes a point when enough money changes hands, the Federal government wants to step in and take a piece of the action.

That's because without any real limits, gifting would be the ultimate act of wealth preservation: rather than go through probate or suffer estate taxes, you could simply give your entire estate to your survivors. No government is going to allow that. Fortunately, the gifting rules in the United States

Federal Gifting Rules Are Fairly Broad and Generous (To A Point)

Each year, each person is allowed to give a total of $13,000 tax-free to any combination of individuals or entities. Beyond the yearly exemption, each person is allowed to give a lifetime total of $1,000,000 tax-free to any combination of individuals or entities. Any money above these limits is taxed at 55%. If you stick to the gifting rules above, when you do pass away (as of 2013), another $1,000,000 of your estate can be passed along tax-free. If you don't, any money you gift is taxed once when the gift is given and also reduces your estate tax deduction by that amount -- so there is ample incentive to stick to the rules.

The Federal rules on gifting money apply to everyone, and cover almost all circumstances with the notable exception of Medicaid.

Medicaid Gifting Rules Are Much Stricter.

When a senior citizen applies for Medicaid -- which many even wealthy people who haven't purchased long-term care insurance do because the alternative is paying as much as $500/day for nursing home care -- Medicaid looks at what you've given away in the past 5 years. Any gift given in the past 5 years, regardless of it's status under the Federal rules on gifting money, is translated into a 'waiting period' using local 'fair and reasonable' prices for nursing home care.

For example, under Medicaid gifting rules, if you give your son $30,000 and then apply for Medicaid 4 years later, Medicaid will see that $30,000 gift. Assuming that your local 'fair and reasonable' price for nursing home care is $300/day, your first 100 days on Medicaid won't pay for your nursing home care. It can turn gifting money into a dangerous catch-22 for unprepared seniors.

Questions about Gifting Money? Call the Schmidt Law Firm!

If you're seeking an experienced estate planning attorney with questions about gifting, call Schmidt Law Firm at 888-459-3077. We offer free consultations and legal assistance on any issue surrounding wealth preservation.


For a free consultation, please call 888-459-3077.
Free consultation
by phone only.

The information gathered by this form will be used for our purposes only and will not be available to any third parties