The Importance of Timing of Transfers

In Post 6, I analyzed the reasoning for delaying the transfer of a house to a child who provided care for a parent for the requisite time period and concluded that the transfer should be delayed until the Medicaid proceedings. The reasons were having the advantage of presenting information to justify the necessary care and also to lose the step-up in basis upon death only if necessary.

Similarly, if an individual has a disabled child who is a possible transferee, the transfer should be delayed until the Medicaid proceeding. That is, a transfer currently if the parent never goes into a nursing home, loses the step-up in basis upon death. The transfer results in the child receiving a carryover basis, which can be voided if the parent dies prior to going into the nursing home. Of course, if the child receives the home and resides in it for the requisite time period, the carryover basis can be increased by a $250,000.00 amount or $500,000.00 amount should the client be married.

Since reverse half-a-loaf planning has been denied by the State, if five-year planning is contemplated, the transfer should be made currently regardless of the laws of the step-up in basis to start the clock running on the 60-month lookback period.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© September 2011, Post 164