Elder Law Answers
Will Medicaid Count an Investment Gone Bad As an Asset?
My mother has been in a nursing home for the past three years. When she went to the home I had control of her funds...
Read moreWould Medicaid Count an Interest-Only Loan as a Gift?
- June 3rd, 2024
Q
I am 66 years old and I live in Florida. I am considering loaning my niece, who is also one of my beneficiaries, $30,000. I would prefer to gift her this amount (using the $28,000 husband/wife gift tax exclusion), but I am worried about Medicaid's look-back period of five years. If I set this loan up as an interest-only loan and stipulate that the loan is forgiven upon my death, would this count as a gift for Medicaid purposes?
A
While every state is different, Medicaid is likely to treat an interest-only loan as a gift. If the promissory note, however, calls for uniform payments and has a payment term that is shorter than your actuarial life expectancy, then it should not be penalized. For more information about promissory notes and Medicaid, check out this article.
That said, assuming that you can afford to make such a gift, perhaps it is unlikely that you or your spouse will need Medicaid coverage in the next five years.
We recommend you consult with an elder law attorney in your state to determine the best way to plan for Medicaid. Find a qualified attorney near you.
Last Modified: 06/03/2024