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Half-a-Loaf Approach to Gifting

by Ira M. Leff, Esq.

November 4, 2009

Charlie is 84 years old and has just entered ABC Nursing Center, which costs $6,022.50 per month (the national average). Charlie's monthly income is $1,800 and he has $125,000 of cash assets. Charlie is a widower and wants to protect some of his assets for his children and grandchildren. What can he do? How about making gifts and protecting 52.92 percent of what he transfers?

• Calculate Assets to be Either Spent or Transferred (Disposable Assets)
  $125,000 - 10,000(burial contract) - 2,000(resource limit) = $113,000
• Calculate Monthly Cash Flow Deficit
  $1,800 - 6,022.50 - 165(AARP) = $4,387.50
• Calculate Amount That Will be Protected
  Disposable Assets - (Month Deficit x y 4,916.55) = y
  $113,000 - (4,387.50y 4,916.55) = y
  $113,000 - 0.892394y = y
  $113,000 = 1.892394y
  $59,880 = y

Proof

Period of ineligibility is $59,800 4,916.55 = 12.17932 months

During 12.17932 months, kids give back (12.17932 x $4,387.50) = $53,436.77

Kids keep $113,000 - 53,436.77 = $59,563.24

Next week I will explain the mechanics of making the transfers, applying for Medicaid and making the transfers back to Charlie.

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