What documentation do we need in order to avoid any potential issues with Medicaid qualification related to giving children an early inhereitance?

1 answer | Last updated: Nov 26, 2016
A fellow caregiver asked...

My parents want to give my siblings and I an early inheritance. What kind of documentation should be kept in order to avoid any potential issues with applying for Medicaid if they should need medical assistance in the future?

Expert Answers

If your parents make a gift to you and your siblings and then apply for Medicaid within five years, there will be a disqualification or penalty period. That means that even if they would otherwise qualify, there will be a period of some months that the state will not pay for their nursing home care, because of the gift. The length of the penalty will depend on the average cost of a nursing home in your state, as well as the amount of the gift. For example, if they give away a total of $100,000, and the average nursing home cost in your state is $5,000 per month, then there would be a penalty period of 20 months ($100,000 divided by $5,000).

However, as long as neither of your parents applies for Medicaid within five years of the date of the gift, then there will be no penalty period imposed, no matter how large the gift was. So, as you can see, it is extremely important that you keep detailed records of what was given to you and your siblings (so as to establish its value, if it was something other than cash), as well as the date or dates of the gifts. Every gift or transfer should be accompanied by a written, dated, signed and notarized record. With those records in your file, you will be ready to answer any questions that may arise should one or both of your parents need to apply for Medicaid in the future.