The Elder Law Forum by Professor Michael Myers Editor's Note: The Elder Law Forum is a public service of the University of South Dakota School of Law, an extension of the SENIOR LEGAL HOTLINE available at no cost to persons 60 and older at 605-677-6343 and firstname.lastname@example.org during regular business hours. Professor Myers teaches Elder Law at the School of Law.
Can't See Family
Appreciation From Grave
"She wants to do it. She wants to be generous. Can she? Should she?" asked the USD Senior Legal Helpline caller (1-800-747-1895); mmyers@usd. edu).
The caller was talking about her mother, age 88, a recent widow who had just sold the modest family home for $33,000 and moved into an assisted living apartment at a cost of $2,100 per month.
With the death of her husband she began receiving $870 per month as a veteran's widow. Other monthly income includes $980 from Social Security and $160 from a company pension. Cash flow essentially covers her basic living costs.
And now, for the first time during a lifetime of rearing six children, she has more money than she needs to live on � $30,000, the net proceeds from the house sale, earning about 3 percent interest. She is not in good health.
"I don't expect mother to live another three years � but you never know," said the daughter.
It had been suggested she give $1,000 to each child over the next three Christmases. "What kind of gift tax would accompany that?" she asked. "None, zero gift tax; that's not a consideration," I advised.
But, from a Medicaid planning perspective, I advised that she would be better off giving each child $3,000 immediately, thereby triggering the three-year lookback rule under Medicaid. That would leave her with a $12,000 cushion and a limited spend-down in the event she needed to enter a more costly nursing home environment.
This Fourth of July family gathering will be a special one. There will be plates of chicken, potatosalad, hot dogs for the grandchildren, home-cranked ice cream, and under six of the plates, an envelope containing a $3,000 check, and a note signed, "Love, Mom."
As we age our grip on the earth loosens. Our needs decline. Nursing home residency is a statistical probability. Only 5 percent of persons over 65 actually reside in a nursing home at any given time.
And, when you are in a grave and the attorney is reading your will, you cannot see the looks of appreciation on the faces of those you love.
Eighty-eight with an adequate cash flow? It's a good time to be generous.