Older clients regularly pose the question of whether they should gift their house to their children. Under Medicaid laws, transferring ownership of a home, usually in the form of a gift, is subject to the look-back period and could result in disqualification. It is important for counsel to structure the gift of a residence without risking Medicaid eligibility. Other considerations that must be taken into account when structuring the gift of a home include liability for applicable tax, and whether to set up the gift as an outright gift or transfer to a trust. Irrevocable income-only trusts can be used, offering potential tax advantages over simply changing the name on the title.
In addressing this dilemma, clients should consider:
- In what situations should elder clients gift their house to their children outright versus setting up a trust?
- What are the key tax issues to understand and consider when senior clients want to gift the residence?
- What issues should counsel consider in order to maintain Medicaid eligibility for their clients?