To Give or Not to Give

It’s never a good idea to give an unwanted gift, even in a will or a trust. Giving someone something that they don’t want is insensitive at best, but giving something that could actually do harm is downright careless.

Yet, every year, plenty of people make the unwise choice to give large gifts to their relatives without considering the full impact of their gift. In many cases, the gift is entirely fine. It’s the lack of documentation that creates the problem. If you want to protect your loved ones, make sure you are giving gifts the right way so that your gift does not have a negative impact on their financial situation.

Here are just a few quick examples of how a gift can become a burden for your loved ones.

Loss of Eligibility for Recipient’s Public Benefits

A relative decides to give a sizeable gift of cash to a disabled child or other family member. While the gift is well-intentioned, it can prove very problematic if that family member relies on government aid to assist with things like long-term care. By leaving money to the relative, the well-meaning giver may have just harmed the recipient’s eligibility for the very care that he or she needed. Now, at best the money will go to that care. At worst, the family will have to scramble to come up with more money to achieve the same goals.

The solution here could have been as easy as a third-party special needs trust, whereby the giving party places money into a trust intended to help the disabled loved one. The money is protected and solely intended for limited purposes, but if drafted properly it can preserve the recipient’s right to receive certain benefits.

Loss of Eligibility for Person Giving Gifts

Switch up the situation a bit and assume that a loving elderly parent decides to give his home to his adult daughter. The daughter moves in and begins helping with daily activities. Sadly, dad has to go to a nursing home. Daughter has the house, but now Medicaid is saying they won’t pay for the nursing home because they still consider the house his asset. With a 5-year look back period, gifts given in the last 5 years are often considered part of a nursing home resident’s assets, thus by not giving the gift in the right way, a beautiful gift becomes an albatross for both father and daughter.

The Deadly Joint Account

All too often, a loving parent or other aging relative will entrust a younger relative with their money by placing them on a joint bank account. The idea is to let someone else manage the funds and pay bills for them. However, a lot of states, New York included, consider this a form of gift. The presumption is that absent some clearly stated intent to the contrary, if you put someone on your bank account, you intend to give them the money.

Therefore, many families have been torn apart by poorly chosen attempts to set up convenience bank accounts.

Help is Close at Hand

If you reside in Westchester or Putnam Counties and need help making a large gift to a loved one, call Meyer & Spencer, P.C. to discuss your options. We can methodically walk you through your various options and provide you with the knowledgeable and compassionate counsel you require in order to make the choice that is right for your family.

Resource:

medicaid.gov/Federal-Policy-Guidance/Downloads/SMD-14-001.pdf

https://www.meyer-spencer.com/the-legal-mechanics-of-lost-wills-in-new-york-surrogate-courts/