Mom wants to gift money. What happens if she needs care?


Q. My mother, who is 96 years old, would like to gift her children much of her savings. She has less than $100,000 and would like to gift $15,000 to each of them. She wants to know if she has to enter into a nursing home in the future, how would this impact her need to apply for Medicaid assistance?
— One of the kids

A. Gifting money to children is a lovely gesture.

But she’s asking a smart question.

Before she goes forward with the plan, it’s important that consideration be given to any future support needs that might occur because there may come a time when additional assistance is required for her well-being, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

She said you should assess whether her current income could cover an increase in monthly expenses without needing to use savings.

“If it’s determined that the savings would be best set aside just in case, your mom should be sure to spell out how she would like her savings distributed in her will,” Mott said.

For the current year, an individual can gift up to $17,000 per person without the need to file a gift tax return, she said.

For Medicaid purposes, in New Jersey, an individual can have no more than $2,742 in income and $2,000 in assets such as a bank account. However, when it comes to qualifying for a Medicaid facility or home care, there is a five-year look-back period that will be taken into consideration by the agency processing the application, Mott said. The look-back period begins on the date that the Medicaid application for long-term care is filed and all financial transactions over the five years prior to that date will be reviewed.

“Should your Mom decide to gift $15,000 to each of her children before year-end and an application for Medicaid filed in the next five years, the assets would be considered hers,” Mott said. “However, this doesn’t mean that she might not qualify at some point in the future.”

A penalty period is determined based on the amount of the gifts divided by the state’s divisor, which is based on the average cost of nursing home care, she said.

“For 2023, the New Jersey divisor is $384.57/day or about $11,627/month,” Mott said. “If she gifts $90,000, the penalty period would be $90,000/$11,627 or 7.7 months. This is the period over which she’d be disqualified from being eligible to receive benefits.”

Email your questions to .

This story was originally published on Oct. 9, 2023. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.