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Thanks in advance for your answers.


My grandfather passed around mid 2018. My aunt who he lived with and took care of him was the co-owner and beneficiary on all of his accounts so my understanding is that 100% of all his accounts default to her once he passed. There was no estate, trusts, or will ever set up. Supposedly he once wrote a hand written will but it was never notarized so it holds no legal value.


My mother is below poverty level and her only income is about $800 per month from social security.


My aunt wants to give my mother around 80k however that would cause my mom to lose certain public benefits she currently recieves like Medicaid, premium free Medicare part A & B, food stamps, and HUD subsidized housing.


In order to maintain my mothers benefits and not put her in a worse financial position than she is currently in, could my aunt simply wire the money to my account and then I could pay off my mothers car, any small debt she has, and moving forward when she needs something I can buy it for her online and have it shipped to her deducting it from that money?


My understanding is that if my aunt did this she would have to file a gift tax return since the amount exceeds 15k however it would not be subject to taxes unless she exceeds the lifetime exemption gift amount which is over 5 million.


Thoughts?

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ElmoHongZito, this is complex. I would highly recommend you see an "Elder Law Attorney" who will advise you on the correct way to handle the money.
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you already asked the same question.....the answers are still the same.
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ElmoHongZito Jan 2019
No one responded to my last update which had relevant information about the situation (its not an inheritance). Thank you for providing zero value with your reply.
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There's nothing to stop your aunt giving you this money if she wants to (unless your aunt may need to apply for Medicaid within the next five years, that is). There is nothing to stop you spending it on your mother if you want to.

Is there any way in which possession of an $80K windfall could improve your mother's quality of life?

Ask your aunt why exactly she wants to hand this money to your mother. If she doesn't have a reason which works to your mother's benefit, perhaps it would be better if she didn't do it. It certainly sounds as if she earned her legacy.
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I agree with frequent flyer. I think your aunt might be able to fund a trust and appoint you as trustee. A consultation with a lawyer is a very good idea.
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Many of the replies referred you to an elderly care attorney ( from your mid December post) and now this post.

Doesn’t appear you’ve taken that advice yet. It’s true when a poster below stated the answers are the same as the first time you asked. Oh, sorry, it’s not an inheritance.

You received really good responses last month. I’m thinking you want Igloo back here so you won’t have to “pay through your nose” for a lawyer as you figure out how to get around the system. Laws vary in each state. I’m surprised you’ve waited this long to speak to an attorney in your state that is well versed in the law in your mother’s area.

Before you listen to anyone giving you “zero value” responses, why haven’t you contacted an attorney or at least paid for a consult?

How will you improve your mother’s quality of life when you are missing the most important part - her health? Paying off her car will do that? You stated she refuses to go to any doctor for treatment & that she’s estranged from her sisters.

She is unhealthy and alone. Money won’t solve that.

You wouldn’t think to provide her with better housing with that money? All she would have to do is give up her benefits and reapply when the money is gone. At 65 she is eligible for Medicare anyway. So she’d give up Section 8 & Medicaid only. You yourself need that money to pay off her car? You cant afford to take that on for your mother?

I thought the CD was going to mature by the end of December thus your urgency last month.

I agree with CM - nothing stopping your aunt from gifting your mother that money. Nothing stopping her to gift it to you for you to spend it on your mother either.
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NYDaughterInLaw Jan 2019
So right.
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A special needs trust may be the answer for the situation. If set up properly you can preserve Medicaid benefits. See an Elder Law Attorney.
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worriedinCali Jan 2019
the money would still go toward her care in that case and that’s not really
what he wants. He wants her to be able to spend the money freely while being supported by government assistance.
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You got a response from an attorney below. You’ve received a lot of advice- now FROM an attorney to SEE an attorney.

You’ve rejected the trust because eventually the money in that trust would go back to Medicaid to pay for the benefits your mother received while she had a significant amount of money in the trust.

You’ve rejected annuities as the payout even at $300 a month would penalize her benefits and put her above the poverty level. If that’s what she wants, why not?

Have you asked your mother what she would like to do with the money? Is she involved in this decision? Not once have you mentioned what your mother might want.

And you are considering asking your aunt to “wire” the money into your account and you would then decide how your mother spends it? And then, merely “deducting” what you “think” the tax amount may be from the transfer. Who would file the tax forms for you, your aunt?

Seriously what gives you the right to decide for your mother? She’s only 65.

And you are calling us “hypocrites” as well. Geez louise.
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ElmoHongZito Jan 2019
I love how people that spend so much time on forums can so easily think they have everything figured out and can so easily judge someone from behind their computer just based on what they have read in a few postings.

I’ll still respond to some of your questions with hopes that you actually try to give guidance before throwing more jabs and judging me...

My mother was the first one to bring to my attention that ANY money she recieves will most likely cause her to lose benefits and that she wants me to look into her options which is what I am doing.

If my aunt wires money to me, she is the one that has to file tax returns for gifting however the way I understand it, she will not pay tax on gifting that money. Every dollar over 15k will go towards her live time gift exemption which is over 5 million
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Elmo, on this site if a thread is started the original poster needs to stay with the original thread. Starting a new thread is confusing. Some don't realize the thread has been asked before. We get tons of new members everyday. And like I said, we get no notifications of responses. Just have to look in our "following" folder every so often. And sad, but seems if a post isn't replied right away it gets pushed down by new posts. Thats why we "bump" them up if we see a stray.
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Based on everything I have read The one reciebing the gifted money does not pay taxes on it. The one gifting it has to file a gift tax paperwork if gifting more that 15k to someone in a year however they do not pay taxes on that money upfront either unless they go over the lifetime exception amount which is between 5 and 6 million.

Also, my aunt has not paid tax on that money. She was a co-owner on his bank accounts. The moment he passes she goes on to be sole owner of those accounts and I do not believe she is subject to taxation in this instance.

I could be incorrect but this is the info to the best of my knowledge.
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JoAnn29 Jan 2019
If aunt has to file paperwork then the IRS will know about the gift. You may not have to pay taxes but your return will have to show the gift. My DH inherited money, we didn't pay taxes but I am sure we had to show it on our return. I think checking with an accountant would be a good idea. Our tax preparer has one on site.
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So you say a 5 million life time gift cap and everything above the 15k will apply to that. Where did you get this information? Because who ever gave it to you is not giving you a clear picture of how that works. I will let you find your own answer for the truth.

You also feel that keeping your mom on public assistance is paid in full by your taxes, if that is true, why not take her in and claim her as a dependent? You would save on your taxes and be able to accept the gift from you aunt without defrauding the system.

You jump on others about judging you and turn right around and judge them, saying if the shoe was on the other foot, we too would be looking at how to commit fraud. Then you criticize people that are caregiving for their loved one for using a forum that was created for that very thing, not how to pilfer the system. This obviously angers you, well, it straight out pisces me off when people use the system and I see children going to bed hungry or living in a shelter because there are no resources available to help their families get back on there feet. I don't know, maybe you all are proud that grandpa amassed a fortune while the taxpayers support his daughter, maybe all of his children, who knows. I don't think I would brag if I was in your shoes.

You asked a poster if they were threatening you, let me say, I don't think it was a threat, I think it was a promise and I'll sign that petition. Get the deadbeats that are abusing the system off welfare.

You should encourage your aunt to do the RIGHT thing, set up a trust that doesn't allow your mom to touch the money but pays her monthly bills, invested properly she could live years without collecting another penny of welfare. When that money is gone she can reapply for the services she is receiving.

You can call it anything you like, but it is fraud and it is criminal, just don't go there. Stay on the right side of the law. You'll feel better knowing that a child will get a home because your moms circumstances improved and created an opening of public assistance.
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ElmoHongZito Jan 2019
I only brushed over your extremely drawn out response. Here is my response as I paraphrase what someone else said today.

Please stop. Special needs trusts is one very common and legal way to accomplish what I want to accomplish. It is unfair for you to continue to insist that what I am suggesting is wrong, when the government has specifically set up a procedure where someone can do just what I want to accomplish. “If the shoe was on the other foot...” you too would be exploring this option (NOT “looking how to commit fraud or pilfer the system” as you try to put words in my mouth).

Once again, there are special government approved vehicles for allowing just this sort of transfer of funds (the aforementioned special needs trust). If someone wants to gift small amounts to mom in a way that won't jeopardize her benefits, then so be it. This is a lot like the difference between tax avoidance and tax evasion. Avoidance is legal, evasion isn't.

The fact that it's legal is really all that matters. That may rub you the wrong way and piss you off but you’ll be ok. I promise. By the way, I hope you calling my mother a deadbeat makes you feel better about yourself.
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So if your aunt wanted the money distributed by the end of the year, what happened, as we are now in 2019?

Posters have advised you to see an elder attorney numerous times throughout this thread and your previous one in mid-December. Why haven't you done so?
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ElmoHongZito Jan 2019
I have spoken to one who advised me to tell my aunt to hold off. I plan on speaking with them again soon.
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I find it very interesting that this poster wants to use tax avoidance vehicles in order to keep her mother on welfare. This poster wants taxpayers to continue to pay for her mother's food, housing, prescriptions, etc. This poster does not need caregiving advice but rather the advice of an attorney and accountant. This poster has not made her mother her dependent and is not claiming her mother as a dependent on her taxes. Is it any wonder that this poster does not like the answers given? People who want to commit welfare fraud seldom do like advice that costs them the free ride they've been given; they feel entitled to game the system.

Next time this poster - or anyone like this poster - asks our forum about how to stay on welfare while benefiting from a financial windfall, I hope someone will hit the report button.

Happy New Year to all the hardworking, honest, and selfless caregivers. Peace.
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ElmoHongZito Jan 2019
First of all, where did you get “tax avoidance vehicles” from? Special needs trust has nothing to do with avoiding taxes. Get your insults straight.

What I am trying to accomplish is not fraud and that’s why there are legal vehicles for these type of situations that I am trying to learn more about. The fact that you do not like this reality does not give you the right to accuse people of commiting fraud while mocking them just because they are not a caregiver in your eyes.

You publicly make false accusations instead contributing usefull information to the thread. That sounds more like something that should be reported to the forum in my eyes.
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Marcia, i have to respond to your claim that President Trump doesn't pay taxes. That is flat out untrue. He pays multi millions in taxes personally. He also employs 10s of thousands of people and if you think an employer doesn't pay taxes you are sadly misinformed. Oh he also doesn't collect welfare.

When someone is asking how to get 80k for a welfare recipient to improve the quality of life without loosing the taxpayers aid they receive is fraud. You can cut that pie any direction you want but it still slices to the same fraud. If it wasn't, you would accept the gift, file your taxes and report it to whomever welfare recipients report to. You would not filter it through someone so it didn't show up as an asset for you, even though it is.

Maybe you have never experienced a hungry child because their parents make to much money to get aid, even though dad only makes minimum wage and mom can't find affordable daycare so she stays home to raise her child, but then is faced with options to buy food or pay the power bill. Its called the working poor. You are very blessed that you have never seen that kind of heartbreak, but it happens everyday in many households in the USA and people that take advantage of the system help create that situation, so when someone wants to travel and have a car paid for and not pay their own way, it is criminal. People work multiple jobs and don't have what this woman has, am I and a few others the only ones that think something is very wrong with that.
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anonymous594015 Jan 2019
I do not believe that is true. But my point is that people who come to this forum and ask what is the best way to handle my finances for Medicaid are often chastised for trying to beat the system. There are legal steps you can take that will allow your family to keep money while your loved one receives Medicaid. I will bet you that most people who come to this forum are not wealthy. If they were, they would be consulting their estate planning lawyers and not this forum. Actually, they probably wouldn't even need Medicaid.

If you are a real estate developer in New York City and you pay taxes, you need to fire your accountant. Mr. Trump was correct in the debate. Mrs. Clinton was a senator for years and proposed exactly no laws requiring that more taxes be paid by people like Mr. Trump. And we are all fine with that. And we're snarling at people who are just asking what they should do to protect the little bit of assets they have.

If you are truly worried about the working poor pay attention to how wealth is being distributed in this country. We shouldn't be fighting with each other over the crumbs we're being left.
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Talk to an atty, the sad part is they will get you for about 2500.00 for the consult and setting up of paperwork, but with 80k thats nothing. If you can be somehow held accountable through a TRUST it should not effect her. (Since the gift is to HER and not you.) That keeps it from affecting her income and you will be held legally accountable that the funds are spent to her benefit. You can also draw up a caregiver agreement where she pays you xxx amount (and if you look at how much a pro caregiver costs you can see that that amount can be quite high) if she wishes to share.

DO WHATEVER it takes to NOT lose those benefits she already has and yes there are work arounds. I know nothing about taxes.
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I sort of think this is all for naught anyway as Elmo stated Aunt’s lawyer told her to hold off. Any good lawyer or CPA would probably think long and hard about putting their client (his aunt) in jeopardy by proceeding with anything that may look improper. Not likely they will give that money to Elmo, is my guess.
Hopefully aunt’s attorneys will work with aunt to provide for her sister legally & will not jeopardize her benefits even though any gift given to mom will affect Medicaid.
This is all conjecture- it’s Elmo’s playing against the attorneys now - his aunt’s attorneys - and I will bet it won’t materialize as attorneys won’t jeopardize their law license recommending something illegal.
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ElmoHongZito Jan 2019
Your entire post is irrelevant. My aunt is not working with any attorneys. I spoke With an elderly law attorney myself and she said to hold off because the end of the year was so close and it would take a little while to get her all the info she needed, work a plan, and implement.
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Elmo,
I am not going to judge the situation. IF you do things legally (whether or not they are morally correct or others approve) you have the law on your side.

Your aunt would be the legal owner of whatever was in your grandfathers' AND HER account. She CO-OWNED it. She would not need to pay any inheritance taxes because it was hers in the first place.

Your mother, (your aunts sister) has income below poverty level. She is on public assistance and being supported by the government (tax payers).
You want to "shelter" the money for her (so she doesn't loose her gov benefits) but spend it to improve her life. Life is not easy on GA and there is often not enough money to pay for everything.

Well, you can't change her apartment (which would be subsidized by the gov), or else she'll loose the benefit.
You can't pay off the car or else it will be considered a "gift" and benefits would be reduced or stopped. I suppose you could pay the payment each month and have it slip under the gov radar. She could then save the amount of the car payment. (That is cheating.)
You could upgrade her furniture. I wouldn't think gov Social Service workers go to the house.
You could supplement the meager amount of food she's able to get on food stamps, so at least she could eat like a queen.
I would imagine you could give her wardrobe a boost with a few new clothes but no fancy name brands that would attract attention.

So, really, what can "better her life" without blowing her benefits? It doesn't really matter WHO gives her the money (you or auntie), she can only accept what is legal.

Since your mom is collecting SS ($800.) could you figure out how much the gov is subsidizing, then figure out how long 80K would last. (for example gov pays $1000. in subsidies/month, the 80K would last 6 years 8 months) She could live well for that long or continue on gov benefits with you supplying what she desires.

With the exception of the Special Needs Trust, I don't see a (legal) way out. I'm sure an elder attorney would have more knowledge in these matters.
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ElmoHongZito Jan 2019
Thanks for your input. I am not sure paying off her car will penalize her since I am the co-buyer on the car and I put down a hefty 5k down payment of my own money 2 years ago to get her into a reliable car. This was before she had applied for any government benefits. It was my promise for her quitting smoking which I later found she never really quit. Before that she was driving a tiny used 2002 saturn piece of junk for probably a decade which I also helped her get into a year or 2 into my first job out of college.

Fancy clothing is not something she cares about. She likes clothing from Kohls and is as happy as a child in a candy store with that place.

No need to upgrade furniture in her apartment. Not sure if you have seen what a subsidized 1 bedroom studio looks like.

Bottom line- her subsidized housing is only partially subsidized; she still pays monthly rent over $200. Her medicaid and medicare free premium gives us the benefit of doubt that she is covered from a health perspective although she is not the best about going to the doctor. Her food stamps is about $100 per month. You do the numbers on that one. “Eating like a queen” is not the goal here.

The $800 in traditional SS retirement she recieves is not making ends meet which is why she embarrassingly asks me or my sister for cash every month just to get by before the next SS check comes in.

Improving her quality of life right now is her getting to the end of the month not worrying about asking my sister for “gas money”.

Could she get off benefits, then use 80k to live the same lifestyle that she lives now and then reapply for government benefits again once the money is gone? Sure she can. Then she is right back to the same or worse circumstances then she is now. Most likely worse due to inflation. Her $800 per month will buy less.

Would I prefer that the 80k be a supplement to make ends meet every month for as long as we can make it last? Yes and this if I can accomplish that while abiding by the law, that is what we are going to do regardless of how many people that bothers on an online forum.
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You could ask your aunt to take over your mother's bills and pay down over time.
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Another thing to consider if mom comes into money, she may have to pack BACK money/benefits she has received, as well.
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Yes. Your aunt can wire the money to your account, leaving your mothers name off completely, which means she has to be able to trust you completely to do the right thing for your mom. Politicians do it all the time.
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I care for my mother in law. The kids and grandkids contribute to her care. Every year they deposit money into an account not owned by her. All her care needs are met from that account. A detail account is submitted to all kids every year. The head of the family needs to be transparent. Care decision is different from financial decisions.
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Have you thought about the tax ramifications YOU would face? YOU would have to pay taxes on the money given to you. Can you afford the taxes on 80K? Yes the taxes could be taken out of the money given but that reduces the money by quite a bit.
Why not give your Aunt the information on what needs to be paid off and she can do that directly so you do not get the money at all. (and while she/you are at it my house needs a few repairs as well...kidding)
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Nancynurse Jan 2019
There isn't any tax on the money gifted to someone. It was only counted against the lifetime gift amount from the giver. That used to be about 5 million until this lastest tax law change and then the inheritance tax went away.
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Keep in mind. Large amount can be given as a gift to you. You may need to file IRS for 3250 notifying the gift. No tax involved. The person if us resident need to notify IRS so that the amount counted towards life time giving. Limit this year is 10 million. No tax due. Failure to do this the penalty is heavy.
Yes proper planning is. Needed to care for our loved ones. One need to do 10 years ahead. Plan 60 on these details.
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I agree with the person who said this question has been asked and answered. Seek out the advice of an attorney.... check out your local Alzheimer’s Association to see if they have a list of lawyers who have knowledge of Medicaid rules.
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Do things legally. Have your aunt pay off those debts so the money doesn’t have to be transferred to the account. Maybe have a monthly stipend From a trust account set up so it doesn’t exceed her monthly income level requirements. Too much money too fast can lead people to abuse it. If it’s for your mothers care, that’s the safer route to go.
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You need not worry about affecting your mother's eligibility for government benefits if the money goes to you vs directly to your mother. It is only assets in which your mother has a legal interest that are countable for government benefits (Medicaid, etc.) purposes.

By the way, a hand-written will is still valid even if not notarized or witnessed, although in your aunt's case, since all your grandfather's assets passed to her outside of probate (as jointly titled accounts), the will would have no effect in any case.
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ElmoHongZito Jan 2019
Thank yoh Gabriel. I appreciate the clarification.

Doesn’t the legality of a non-notarized/non-witness will vary by state?

I know this doesn't apply to us because my aunt was joint owner on his accounts. But thought I would ask anyway. Thanks
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I totally appreciate your situation and I can't believe the nasty responses you've received! What you are trying to do is not cheating the system -- it's being smart, and any elderly care advisor would commend you for it. I was actually lead to your question after reading a previous article on this website about protecting your money -- https://www.agingcare.com/articles/strategies-to-protect-money-from-medicaid-175434.htm
It's a pretty good article and may help in some way. Good luck!
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Would it be a problem if your Aunt gifts it to you? You can go to an Elder Law Attorney, has to be Elder Law, and he/she can put it in a legal Medicaid trust, you would be the agent and then you could spend it on mom without mom losing any of her benefits. It will cost to go to the Elder Law Attorney but be far less than trying to figure out what to do with the money and put mom in jepardy.
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I keep seeing Special Needs Trust mentioned. This trust is set up for Disabled people. As in physically and mentally. You cannot file for it if 65 or over. It is limited in how it can be used. Cannot be used for food or lodging or utilities you can get help in paying. If you get Medicaid of any kind, the trust reverts to them upon death to offset the cost of your care. If, there is anything left, that goes to the beneficiary.

My nephew has been disabled from birth. His mother passed and left an insurance policy. When he filed for SSD, we were told by Social Services to obtain a Special Needs Trust to protect the 50k. The lawyer cost 5k, which we were allowed to use the insurance money for. It was to take a year but there was a glitch and it took two. Primarily, the only thing I can use this trust for is his care when and if needed. Things that aren't covered by Medicaid or Medicare. The lawyer had to file with the County Court and their was a hearing with a Judge. My nephew was present. The Judge had to OK the trust. So, its not something that is automatic. And if Elmo's Mom is past the age of 65, she can't apply for one. Age related disabilities are not covered by a Special Needs Trust. As it says its for people with Special Needs. Like Downs Syndrome, Cerebral Palsy, etc.
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I agree, this thread has gotten nasty. So at this point, I think Elmo has gotten all the info we are able to give him as lay people. He really needs to get a lawyer who knows Medicaid law and taxes. Some have a CPA with their firm.

Good Luck Elmo and get back to us in how it all turns out. We may learn something we didn't know.
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As far as your Aunt gifting the money how that is handled would be between her and her accountant. Now as far as gifting you the money, it would then be yours to use as you please. My mother is on Medicaid and we from time to time help her out with some expenses. This does not count toward her income or effect her status. Now if we were to gift her directly a sum of money or say pay for an expensive vacation that would certainly effect her status. I don't see this as subverting the system, it is mearly helping out our elders. If your mother should die before the money is all used up I doubt you would be expected to return it. As I said it is a gift to you to use as you please. I apologize for some of the negative posts on here. I did not feel that you were trying to find a way to scam the government. You are correct if your aunt gifts the money to your Mom it will screw up all her benefits at least for awhile and just based on the paperwork involved you want to avoid that.
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