Dad has always been generous. He slips the grandkids money when they visit. He writes a check to his church every month. He helped your sister with a down payment and recently started giving money to the caregiver who drives him to appointments.
None of that seemed concerning when he was healthy.
But now Dad may need long-term care, and suddenly everyone is asking the same question: Were all those gifts a problem?
For families considering Medi-Cal planning in Calabasas, seemingly innocent generosity can have unexpected consequences. And sometimes, frequent gifts can raise concerns that have nothing to do with Medi-Cal at all.
Does giving money away affect Medi-Cal eligibility?
It can.
When someone applies for Medi-Cal to help pay for long-term care, certain transfers made during the applicable look-back period may be reviewed. Giving money or property away for less than fair market value can potentially result in a period of Medi-Cal ineligibility.
That can include transfers people never thought of as “Medi-Cal gifts,” such as helping a grandchild with college, giving an adult child money for a house, or transferring property to a family member.
This is why Medi-Cal planning in Calabasas should ideally begin before a long-term care crisis occurs.
What if Dad has always given money to family or charity?
A long history of generosity does not necessarily mean every gift is harmless for Medi-Cal purposes.
Families sometimes assume that because Dad has given each grandchild $5,000 every Christmas for twenty years, continuing to do so cannot create a problem. Medi-Cal rules and federal gift-tax rules, however, are not the same thing.
The amount someone may give without filing a federal gift-tax return does not automatically mean the transfer is ignored when determining Medi-Cal eligibility. That distinction catches many families by surprise.
When should giving money away become a red flag?
Sometimes the bigger concern is not Medi-Cal. It is why the gifts are happening.
A new romantic partner receiving large transfers, a caregiver suddenly receiving expensive gifts, unusual charitable donations, or money disappearing into online relationships may warrant a closer look, particularly if Dad is experiencing memory problems or becoming increasingly dependent on others.
Generosity alone does not mean someone lacks capacity or is being exploited. Older adults retain the right to make financial decisions, including decisions their children dislike.
But dramatic changes in someone’s financial habits can justify asking questions.
Can a power of attorney stop an older parent from giving money away?
Not automatically.
Having a power of attorney does not generally take away the older person’s own authority to manage money while they retain legal capacity. The agent’s authority also depends on the document and applicable state law.
If there are concerns about incapacity, undue influence, exploitation, or rapidly disappearing assets, an elder law attorney can help the family understand what options may be available.
The best time to address these issues is before a stack of checks becomes a long-term care crisis. At Law Offices of Lisa S. Golshani, APLC, we help families understand how gifting, asset protection, and long-term care planning fit together. Give us a call at (818) 334-2805 to schedule a consultation about Medi-Cal planning in Calabasas and protect the choices available to your family.
Frequently Asked Questions
Can you give money to your children before applying for Medi-Cal?
Potentially, but gifts made during the applicable look-back period may affect Medi-Cal eligibility. Speak with an elder law attorney before making significant transfers when long-term care may be needed.
Does the IRS gift-tax exclusion apply to Medi-Cal?
Not in the same way. A gift that does not trigger federal gift tax consequences can still create an issue for Medi-Cal eligibility.
Are gifts to caregivers a problem?
They can be. Depending on the circumstances, payments or gifts to caregivers may raise Medi-Cal, estate planning, fiduciary, or elder exploitation concerns. Properly documenting legitimate caregiving arrangements can be especially important.
