Henry wrote:
- quote -

Where the issue often comes up is with long-term care, which is only
covered by Medicare in limited circumstances - so Medicaid is the
program that ends up covering it. I don't know how it works when
Medicare coverage comes from disability rather than age, but I believe
here in CA, Medi-Cal (which is this state's Medicaid program) picks up
the slack, so those issues regarding claims against the home could come
up despite coverage by Medicare. This isn't my specialty and I'm not
familiar with all of the rules, and as I said they're different in each
state anyway.

I guess the way I'd phrase it is, "is there an advantage to putting the
house in her name, rather than instead buying it and allowing her to
live there rent-free?" I don't know the answer to this but it seems that
there are a lot of scenarios where a creditor could get the house, and
none of those scenarios would happen if it was simply your property and
you allowed free rental. And either way she has a place to live.

-Tad

Tad Borek wrote:

- quote -

I just found out that she will be eligible for Medicare (as opposed to
Medicaid) in a few months. Apparently it available for the elderly and
some people with disabilities. From what I am reading, Medicare doesn't
place any importance on what the recipient owns. So I think we are
still OK.

Henry

Try the MS society. Many advocacy groups have resources to take care of
these situations.

Good luck

"Henry" <Henry[at]somewhere.com> wrote in message
news:XV9%d.20440$Pz7.11808[at]newssvr13.news.prodigy.com...
- quote -

Henry wrote:
- quote -

Well it might not be quite that bad but as an example, if you have
medical costs covered by Medicaid, and you own a home, the state in
question may have the right to seek eventual repayment from your estate.
She shouldn't be forced out of the home during her lifetime but the
value of the home could end up going back to the state, if that's how
much medical cost was covered through the program, and that's how your
state does things.

[In a more civilized society an individual unlucky enough to draw an MS
lottery ticket would not be forced to devote all of their assets towards
unaffordable and absurdly priced medical services. Unfortunately that's
the system we have in place, and there isn't much on the table
suggesting major changes.]

The point is, these benefits programs are complicated and vary by state
to a certain extent. You should be able to find free legal aid of some
type to find out more about the benefits and maybe even to help plan out
this setup with the condo. My hunch is that you could accomplish your
purposes (low-cost or free housing) without handing over title or
jeopardizing any benefits.

-Tad

TB wrote:
- quote -

Boy they sure do make it difficult if you come down with a disabling
disease. So you have to be homeless to get coverage, geez. I guess
whatever you do, don't get sick. - H


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Henry wrote:
- quote -

Henry,
The quick answer is no, the recipient of a gift doesn't pay tax in the
situation you're describing. The fact that you gave more than $11k in a
single year to one individual would require that you file a gift tax
return in the year of the gift. That gift may never result in any tax
paid, though - I think other posts address this.

But I don't think anyone's mentioned that it might not be a great idea
to gift a condo to a disabled individual without first understanding the
effect the property will have on aid she receives, both now and down the
line, and the disposition of the property should she receive aid,
specifically Medicaid. You might be better off making the form of your
gift a reduced (or zero) rent on a property that you retain ownership
of. Check in your area, there should be some social services agencies
that can provide some guidance on these topics. And it would be a good
idea to get the advice of a lawyer regarding the property and the
arrangement with your friend.

-Tad

David B. Redmond wrote:

- quote -

I see. This is good info and now I think my idea will work.

I read publication 950 online (http://www.irs.gov/pub/irs-pdf/p950.pdf)
and it does sound like neither her nor myself would owe taxes. But I
would have to report it like you said, and it would count against my
345k gift tax credit which I could never possibly come close to
exceeding. I don't understand the difference between the 345k and 1M
but maybe if I re-read it it will make more sense.

Still, I will take your advice and consult a tax advisor. Thanks for
the info.

Henry

On Sun, 20 Mar 2005 16:15:59 CST, Henry <Henry[at]somewhere.com> wrote:

- quote -


- quote -

I am not a tax advisor or attorney but my understanding is:

You do not have to "pay" gift tax on any amount over $11,000. What
actually happens is that gifts over $11,000 are no longer excluded
from being "subject to tax" and will have to be reported on a gift tax
return. At that point the potential tax on the non-excluded amount
starts to count against the $345,000 gift tax credit part of the
lifetime gift and estate credit which effectively excludes a lifetime
amount of $1,000,000 of gifts from tax. This is explained in IRS
Publication 950. This is part of a unified credit against both gift
and estate taxes. If you are concerned that you may have a taxable
estate in the millions of dollars, planning against how you will avoid
excessive estate and gift taxes is in order. If your estate plus
gifts does not reach the thresholds explained in Publication 950
allowing for your guess as to how Congress will continue to treat this
credit after 2011, then you can certainly make gifts larger than
$11,000 in one year with little liklihood of actually paying any tax.
If it is important to you to make this gift, as it sounds that it is,
consult a tax advisor or an estate planner to understand the details
of gift and estate taxes.

John A. Weeks III wrote:

- quote -

Those are some interesting ideas, thanks. I was wishing I could just
somehow give it to her so she would own something. She wants to be as
independent as possible which is understandable.

It's too bad there are no exceptions for those with disabilities though.
I was hoping there was but it doesn't seem like it. I should
probably consult an accountant or someone about this too.

Henry


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In article <XV9%d.20440$Pz7.11808[at]newssvr13.news.prodigy.com> ,
Henry <Henry[at]somewhere.com> wrote:

- quote -

My understanding is that you would have to pay gift tax on
any gifts over $11,000 per year. There are still a number
of ways around this. One idea is for your friend to get a
balloon mortage, and you pay her the $11K per year. She would
accumulate the payments to pay off the balloon balance.

Another option is for you to buy the condo and simply let
your friend stay there for little or no rent. If your $70K
will not cover the entire price, get a mortgage, and put
something like 50% down. The money you keep in savings
will make the payments. If you time it well, the money may
out live your friend. At that time, sell the condo to
get rid of the mortgage and repay your savings.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

I am thinking about gifting like $70k to a disabled friend who has MS so
she can purchase a small condo. She can't work right now and is
collecting disability checks from the government. It is only like 1k a
month which would be enough to live on if she didn't have a mortgage or
rent.

My question is, would she have to pay taxes on this if I do go through
with the gift? If she does then that won't be enough to purchase the
small 1 level place I had in mind. But I can't afford any more. So,
does anyone know the answer to this or have any advice?

Thx.