dad insists on gifting me all his money- help!

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freckles01
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dad insists on gifting me all his money- help!

Post by freckles01 » Sun Mar 04, 2018 5:10 pm

i've posted a couple of times re- my parent's, now my widow'd dad's financial situation, last time on 2014. if i posted in the wrong section, please move:)

he is 83 now and has had a few health scares but managed to mostly come back each time- little older and weaker but still a stubborn proud man.

dad lives with me, i provide care giving, housing, food, transport etc, have my own property/employment/efunds/retirement etc.

juggling 2 situations and seeking advise for either or both!

1) in 2014, dad's brother lost his house, dad gifted money to me to buy condo to rent to uncle- yup. uncle wanted to buy property but its highly appreciated and he cannot afford it now but dad still wants to help. after some discussion, plan to sell property and gift a portion to uncle so he can buy a smaller cheaper place.

understand there will be taxes and recapture of depreciation to pay. anything else i need to consider with sale of condo?

i consider this my dad's money but need to consider it within my bubble too, tax rate- 24%, plus high state tax. i currently have total bonds in 401k and ibonds, keep total and total international in taxable and rothira with vanguard.

plan to put rest of funds into cd ladder or tax free munis to keep it somewhat liquid?


2) for the last couple of years, my dad has wanted to gift me the bulk of his money and is super insistent now since a friend mentioned medicaid. part to safeguard (200K) and part as payment for providing parents/his care giving/housing/food/ etc for free all these years.

i'm not tax or medicaid savvy but understand there is at least a look back period. we've had many heated discussions but i cannot get him to understand this. the only way he will understand is to go through the process and see how it unfolds.

plan to open a separate savings account to temporarily park his cash. if everything is gifted to me but returned before the end of the year, will form 709 or other explanation need to be considered?

he does not have ltc insurance, total money about 200k- not much and could be spent down for care he will/may need without the gifting but did i mention he is very very stubborn? no pension, only social security about 1400.

uncle and siblings would definitely benefit from any remaining funds, it would improve their lives and provide more financial stability, so any funds left over will be dispersed to them.

itstoomuch
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Re: dad insists on gifting me all his money- help!

Post by itstoomuch » Sun Mar 04, 2018 5:20 pm

sounds complicated.
I'd look into some professional advice. But that's me.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

miamivice
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Re: dad insists on gifting me all his money- help!

Post by miamivice » Sun Mar 04, 2018 5:24 pm

Well, if he is of sound mind and wants to give you money, so be it. He can do what he wants with his money.

However, if he is simply trying to transfer assets to get Medicaid to pay for LTC it gets a lot more complicated. For one, a medicaid paid facility and room can be subpar to one that you can pay for on your own. For example, medicaid only pays for a shared room while your dad might want a private room.

essbeer
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Re: dad insists on gifting me all his money- help!

Post by essbeer » Sun Mar 04, 2018 5:25 pm

I think you need to get an elder-law lawyer. There are certain types of annuities you can buy to help qualify for Medicaid, but you really shouldn't be trying to do this yourself.

Jack FFR1846
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Re: dad insists on gifting me all his money- help!

Post by Jack FFR1846 » Sun Mar 04, 2018 5:28 pm

This sounds like a bunch of amateur schemes. Get with an elder law attorney to go over everything that's been done and everything that's planned.
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dbr
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Re: dad insists on gifting me all his money- help!

Post by dbr » Sun Mar 04, 2018 5:32 pm

miamivice wrote:
Sun Mar 04, 2018 5:24 pm
Well, if he is of sound mind and wants to give you money, so be it. He can do what he wants with his money.

However, if he is simply trying to transfer assets to get Medicaid to pay for LTC it gets a lot more complicated. For one, a medicaid paid facility and room can be subpar to one that you can pay for on your own. For example, medicaid only pays for a shared room while your dad might want a private room.
This is true. He/you need to consult advice on this. As an example nicer assisted living or nursing homes may admit you on elderly waiver after you have paid full price with them for one year or two years. A better use of his money might be to spend it down over two years on himself when the time comes.

Yes, there are look back periods. I think five years is about the number, so if he is giving away all the money now he had better not be planning on getting any assistance until after age 88 or you will be stuck giving the money back. Of course that might be alright as well, but you should have your eyes open.

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David Jay
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Re: dad insists on gifting me all his money- help!

Post by David Jay » Sun Mar 04, 2018 5:47 pm

As 3 other people have already said, you need professional help from an elder law attorney.
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Meg77
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Re: dad insists on gifting me all his money- help!

Post by Meg77 » Sun Mar 04, 2018 5:50 pm

You haven't considered gift taxes in either scenario. If you give your uncle more than $15,000 per calendar year, you will have to file a gift tax return and pay gift taxes on that amount (or use up part of your lifetime exclusion limit). Same goes for your father if he gives you more than $15,000 per year.

It sounds like it's reasonable for him to want to give back for all the housing and support you are providing for him. So you could suggest a compromise: he gives you a lump sum of $15,000 per year as a gift, and in addition he can pay for groceries and utilities. If he's insisting on more than that, he could technically pay you rent too - but then you'd have to claim that as rental income (but also get to deduct part of your mortgage interest, etc.), which gets more complicated. Remind him that you'll be way better off inheriting the funds since you'll get a step up in basis in that case. If he gifts you appreciated stock or real estate and you sell it, you'll have large capital gains to pay since you will also inherit his cost basis via a gift. If you inherit the same assets and sell immediately, you'll have no gains since the basis will be "stepped up" to the market value at the time of his death.

The average nursing home stay is very short, especially for a man his age, so he can probably cash flow that expense when and if the time comes without much of a problem. It'll be much better than a medicaid nursing home (trust me - my sister works in one), and it's what the money is there for.

If your uncle is paying the rent in a timely manner - market rent - then your best bet is to keep the rental and not sell. You'll incur capital gains tax, depreciation recapture, and gift taxes to give him some of the proceeds to boot. Big expense just to effectively kick him out (which you could do without selling the place!!). I get wanting to cut ties and not be his landlord for sure though. If you do sell and go through with it, look into structuring your gift not to exceed $15k per year in order to avoid the gift tax issue.

PS - You don't have to accept a gift from your dad. Just don't cash the check if he writes one. Don't give him your bank account info so he can't wire you funds. He can't force you to accept a monetary gift.
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123
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Re: dad insists on gifting me all his money- help!

Post by 123 » Sun Mar 04, 2018 6:05 pm

One argument that might work with your dad is that if he gives you all his money and something happens to you where would that leave him? Any assets held in your accounts/estate would take some time and effort to gain proper access to. When the money remains as his he can conceivably have others help him with financial transactions.
The closest helping hand is at the end of your own arm.

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Re: dad insists on gifting me all his money- help!

Post by smitty1515 » Sun Mar 04, 2018 6:45 pm

miamivice wrote:
Sun Mar 04, 2018 5:24 pm
Well, if he is of sound mind and wants to give you money, so be it. He can do what he wants with his money.

However, if he is simply trying to transfer assets to get Medicaid to pay for LTC it gets a lot more complicated. For one, a medicaid paid facility and room can be subpar to one that you can pay for on your own. For example, medicaid only pays for a shared room while your dad might want a private room.
Not to mention asking the state to pay when there are assets to pay for care seems unethical. +1 on the reduced standard of living on states dime vs your own. You’ll get the crappiest room in the building w a roomie. Not too desirable...
Be fearful when others are greedy and greedy when others are fearful. -Warren Buffett

dbr
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Re: dad insists on gifting me all his money- help!

Post by dbr » Sun Mar 04, 2018 6:54 pm

smitty1515 wrote:
Sun Mar 04, 2018 6:45 pm
miamivice wrote:
Sun Mar 04, 2018 5:24 pm
Well, if he is of sound mind and wants to give you money, so be it. He can do what he wants with his money.

However, if he is simply trying to transfer assets to get Medicaid to pay for LTC it gets a lot more complicated. For one, a medicaid paid facility and room can be subpar to one that you can pay for on your own. For example, medicaid only pays for a shared room while your dad might want a private room.
Not to mention asking the state to pay when there are assets to pay for care seems unethical. +1 on the reduced standard of living on states dime vs your own. You’ll get the crappiest room in the building w a roomie. Not too desirable...
Which is why there are rules in place to prevent an overly blatant practice of such things. I strongly suspect the vast majority of people being cared for in facilities of minimal standards are not there as part of a ploy to keep their money out of the hands of the government. I do know people who might have had more money for their own care but nothing like a plot to get government paid care had/has much to do with it. You are certainly right that it isn't a choice most people would make if they could help it.

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Sandtrap
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Re: dad insists on gifting me all his money- help!

Post by Sandtrap » Sun Mar 04, 2018 6:55 pm

Seek legal counsel.
The chances of things coming back to you in a bad way or bad feelings from others is not worth taking.
This way a third party professional takes the "heat".
j

freckles01
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Re: dad insists on gifting me all his money- help!

Post by freckles01 » Sun Mar 04, 2018 10:24 pm

dbr wrote:
Sun Mar 04, 2018 6:54 pm
smitty1515 wrote:
Sun Mar 04, 2018 6:45 pm
miamivice wrote:
Sun Mar 04, 2018 5:24 pm
Well, if he is of sound mind and wants to give you money, so be it. He can do what he wants with his money.

However, if he is simply trying to transfer assets to get Medicaid to pay for LTC it gets a lot more complicated. For one, a medicaid paid facility and room can be subpar to one that you can pay for on your own. For example, medicaid only pays for a shared room while your dad might want a private room.
Not to mention asking the state to pay when there are assets to pay for care seems unethical. +1 on the reduced standard of living on states dime vs your own. You’ll get the crappiest room in the building w a roomie. Not too desirable...
Which is why there are rules in place to prevent an overly blatant practice of such things. I strongly suspect the vast majority of people being cared for in facilities of minimal standards are not there as part of a ploy to keep their money out of the hands of the government. I do know people who might have had more money for their own care but nothing like a plot to get government paid care had/has much to do with it. You are certainly right that it isn't a choice most people would make if they could help it.
i do not want him to go to a long term care/skilled nursing facility and neither does he. most of the responses have assumed that is the plan for gifting his money. he will stay at home and we will hire help as needed. he wants to die at home or in the hospital, no where else.

as i mentioned earlier, a friend told him about medicaid and as much as i've explained the eligibility requirements, he wants to apply anyways. i will do as asked so he can see how it will end up- him being denied.

question- what if any consequences if he gifts me money at the beginning of the year and if its returned before end of year? hoping thats how long before the denial notification. will he need to fill out a 709 form?

thank you

freckles01
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Re: dad insists on gifting me all his money- help!

Post by freckles01 » Sun Mar 04, 2018 10:50 pm

Meg77 wrote:
Sun Mar 04, 2018 5:50 pm
You haven't considered gift taxes in either scenario. If you give your uncle more than $15,000 per calendar year, you will have to file a gift tax return and pay gift taxes on that amount (or use up part of your lifetime exclusion limit). Same goes for your father if he gives you more than $15,000 per year.
yes, dad filed a 709 form when he gifted over the limit, was under the lifetime exclusion limit and no tax due.

if the condo is sold, i will file a 709 as well for gifting my uncle in excess of 15K

so long as its under the lifetime exclusion limit ( some millions of dollars), understand there is no tax due? if there is any fees or taxes from the sale, i will use profits to pay and put rest into liquid savings- cds and or tax free munis.

just to be clear, any costs associated with his care beyond the current situation will be paid out of his money- gifted or not. any left over funds will be dispersed after.

not trying any schemes here... wanted to post because there are many smart experienced people here who may of gone thru this experience with their own family.

thank you

mpsz
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Re: dad insists on gifting me all his money- help!

Post by mpsz » Sun Mar 04, 2018 10:52 pm

I have personally gone through this with relatives. I strongly recommend speaking with an elder law attorney.

If your relatives are unhappy with how things are divvied up, they can construe this as elder abuse, etc. There are also various lookback periods on gifts, etc. And some stuff is state-specific.

I believe you when you say you're not up to any "schemes", but your relatives could get greedy/jealous and make things difficult.

You can have all your questions answered in 1-2 hours by someone qualified to practice in your state.

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Re: dad insists on gifting me all his money- help!

Post by Watty » Sun Mar 04, 2018 11:16 pm

David Jay wrote:
Sun Mar 04, 2018 5:47 pm
As 3 other people have already said, you need professional help from an elder law attorney.
Another +1 on this.

One thing that people often don't consider is that something could happen to you like death, divorce, financial problems, a lawsuit, or you could go into long term care at an early age with something like a stroke or early dementia. These do happen.

texasgal47
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Re: dad insists on gifting me all his money- help!

Post by texasgal47 » Sun Mar 04, 2018 11:33 pm

Another +1 for seeking legal advice. This is extremely complicated stuff. There may also be good options you and your father may not be aware of without expert council. By the way, I would seek a lawyer who is board certified in elder law. Many who claim that title are not.

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Re: dad insists on gifting me all his money- help!

Post by Diogenes » Mon Mar 05, 2018 1:04 am

Kudos to you for trying to sort through options, as you try to do the right thing. It sounds like your Father is a man of some means. As such he shouldn't need to worry about things like trying to get Medicaid (taxpayers) to pay for his possible nursing home care. That's a well-known type of scam and probably is not really the way he would want to end up anyway. It's designed for those that need it, he doesn't.

A reputable eldercare lawyer is certainly the way to go to start. There are other considerations besides the money that both of you could use advice on. Your Father should be involved and in the driver's seat of course as long as he can be. That includes the lawyer's plan, especially if he would like to go with a trust of some kind while he is still mentally able. This is a common situation really. But it's also important enough that no forum (even BH) can give you the answers. Too many personal variables.

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Re: dad insists on gifting me all his money- help!

Post by gd » Mon Mar 05, 2018 7:22 am

freckles01 wrote:
Sun Mar 04, 2018 10:24 pm

i do not want him to go to a long term care/skilled nursing facility and neither does he. most of the responses have assumed that is the plan for gifting his money. he will stay at home and we will hire help as needed. he wants to die at home or in the hospital, no where else.

as i mentioned earlier, a friend told him about medicaid and as much as i've explained the eligibility requirements, he wants to apply anyways. i will do as asked so he can see how it will end up- him being denied.
Two suggestions. First, try to set some limits on future home care. If you aren't going to give up your life for him indefinitely, try to draw the boundary now and be realistic about what you can deal with for years on end. Then determine what resources are needed-- e.g. 24/7 home care will be insanely expensive. I understand the "no nursing home" attitude; I have some familiarity with them and would, frankly, rather just... skip it. But that's not the same as independent and assisted living. You can utterly disrupt your life to keep him out of an assisted living facility that many people end up finding to be a bit of a relief once they settle in. You won't achieve a perfect result with this effort, but any foundation is better than none.

Second, depending on his personality, an advantage of outside advice is a neutral authority figure. You're just the kid.

westrichj312
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Re: dad insists on gifting me all his money- help!

Post by westrichj312 » Mon Mar 05, 2018 8:08 am

Also, you can withdrawal say 20K and take him to Vegas or your local casino and hand the cash to whomever. Hello peoples!! the IRS has better things do to than wonder around tracing steps to see where every penny goes. Just saying....

mkc
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Re: dad insists on gifting me all his money- help!

Post by mkc » Mon Mar 05, 2018 10:20 am

Another very strong recommendation to seek the assistance of an elder care attorney.

I have been through the Medicaid application process for my mother (she was incapacitated and nursing home costs consumed her savings.) It is a substantial effort to collect all the financial documentation for the look-back period and record of assets and income. There is absolutely no way I could have done this without a good attorney guiding me.

The look-back period depends on your state and county. I had to document 2 years for my mother - every single monthly statement, every single withdrawal or deposit over $2000 had to have back up documentation. Any withdrawal of any kind for which we did not have a receipt for where it went was considered a gift and thus considered as if she still had the money at her disposal.

justsaying
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Re: dad insists on gifting me all his money- help!

Post by justsaying » Mon Mar 05, 2018 11:19 am

Not to pile on, but one additional caution about gifting without legal advice: A Medicaid application within five years after a gift can result in a disqualification for much longer than five years, at least in my state.

NAELA.org is a good place to start a search for an elder law attorney.

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Re: dad insists on gifting me all his money- help!

Post by WhyNotUs » Mon Mar 05, 2018 11:42 am

smitty1515 wrote:
Sun Mar 04, 2018 6:45 pm
Not to mention asking the state to pay when there are assets to pay for care seems unethical.
+1
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Re: dad insists on gifting me all his money- help!

Post by itstoomuch » Mon Mar 05, 2018 7:56 pm

The most regretful thing that I did with my mother was to refuse her offer of giving me money while I was taking care of her.
She always was a person who could take care of us and herself. It pleased her to being able to offer some type of compensation to me especially when we ourselves were strapped for money 2008-2012 and caring for 2 other parents of 90+ years old.
I should have graciously accepted the money and simply put the money back into her account.
YMMV
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

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