Gifting money and Power of Attorney

What is the name of your state (only U.S. law)? Arizona

My elderly parents recently moved from Wisconsin to Arizona. My mother has Alzheimer's and my father has not been diagnosed but Im fairly sure he also has this awful disease as well. My brother who lives in Ohio has Power of attorney for financial concerns of my parents. There are 6 kids in our family. We are trying to discover the best way to protect my parents money from the Govt. when they pass away.
We were thinking of gifting each child the max amount each year ($11,000?) and placing all that money into a bank account for our parents to use as needed until they pass. At that time the money will be divided among the kids. Does anyone have any experience in this subject? Is it true that the POA agreement must state specifically about "Gifting" money ? Any info you could pass along on this matter would be greatly appreciated. Best Regards, Steve

We were thinking of gifting each child the max amount each year ($11,000?) and placing all that money into a bank account for our parents to use as needed until they pass.

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Look up conversion (of funds). This is a legal advice site not illegal advice site.

Is it true that the POA agreement must state specifically about "Gifting" money ?

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Yes.

Look up the rules surrounding gifting on your state Medicaire/Medicaid website.

The parents can legally gift each year, however those gifted funds then will lead to an ineligibility period. The length of the ineligibility period is dependent upon how much was gifted, and a rate they use for average nursing home charge. Read up on the lookback period, typically now 5 years. This should all be detailed out on your states website.

A gifting strategy like this needs to be done years in advance of reaching old age.

Kiawah said:

Look up the rules surrounding gifting on your state Medicaire/Medicaid website.

The parents can legally gift each year, however those gifted funds then will lead to an ineligibility period. The length of the ineligibility period is dependent upon how much was gifted, and a rate they use for average nursing home charge. Read up on the lookback period, typically now 5 years. This should all be detailed out on your states website.

A gifting strategy like this needs to be done years in advance of reaching old age.

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Isn't the strategy of gifting for the person doing the gifting to use that money fraud/conversion?

BlondiePB said:

Isn't the strategy of gifting for the person doing the gifting to use that money fraud/conversion?

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Huh?

I'd kinda like to know what the OP means by this:

We are trying to discover the best way to protect my parents money from the Govt. when they pass away.

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If there are big bucks at stake, the best way is to consult with an elder law/estate attorney.

The problem with gifts is that they are gifts. You can say "We are in agreement that..." all you want. That's only good until one of the parties decides that they are no longer in agreement.

"We are trying to discover the best way to protect my parents money from the Govt. when they pass away"

We are just trying to find the best way to legally protect this money from tax as much as possible. My father often said he wanted to set this up before he died but never did. Now he is not very competent so we just want to respect his wishes if possible. Taxes are going to happen but I`m sure there are strategies out there that can help lessen the amount.

BlondiePB said:

Isn't the strategy of gifting for the person doing the gifting to use that money fraud/conversion?

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Yes, I suppose it can be if you were raised that way.

StevenH said:

"We are trying to discover the best way to protect my parents money from the Govt. when they pass away"

We are just trying to find the best way to legally protect this money from tax as much as possible. My father often said he wanted to set this up before he died but never did. Now he is not very competent so we just want to respect his wishes if possible. Taxes are going to happen but I`m sure there are strategies out there that can help lessen the amount.

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What is the potential value of his estate? The exemption is currently at $3.5M. One can only guess what our democratically-elected officials may do in the future. But if I could get the proper odds, I would take the bet that it won't be decreased from that.

anteater said:

What is the potential value of his estate? The exemption is currently at $3.5M. One can only guess what our democratically-elected officials may do in the future. But if I could get the proper odds, I would take the bet that it won't be decreased from that.

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I`m estimating about $700,000 cash and a home valued at about $225,000

Originally Posted by anteater

Originally Posted by BlondiePB
Isn't the strategy of gifting for the person doing the gifting to use that money fraud/conversion?

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Huh?

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What do you mean, huh?

It's easy: giftor gives xxx amount of money to giftee to hold in giftee's bank account for giftor's use.

StevenH said:

Yes, I suppose it can be if you were raised that way.

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Then, you used a very poor choice of words.

We were thinking of gifting each child the max amount each year ($11,000?) and placing all that money into a bank account for our parents to use as needed until they pass.

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BlondiePB said:

What do you mean, huh?

It's easy: giftor gives xxx amount of money to giftee to hold in giftee's bank account for giftor's use.

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Aw, c'mon. That sentence was a mindbender!

As long as the giftee is free to do what they wish with the gift, I don't see a problem.

StevenH: I`m estimating about $700,000 cash and a home valued at about $225,000

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My opinion is that you are thinking of going down an iffy path that has plenty of potholes when the need to start down the path at all is not evident.

anteater said:

Aw, c'mon. That sentence was a mindbender!

As long as the giftee is free to do what they wish with the gift, I don't see a problem.

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My problem with the whole thing is that the giftee is not free to do what he/she wants with the money. The money is to be held in the giftee's bank account for the giftor.

BlondiePB said:

My problem with the whole thing is that the giftee is not free to do what he/she wants with the money. The money is to be held in the giftee's bank account for the giftor.

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Prove it! And none of OP's statements here about intentions count as proof!

I've received gifts from relatives. They went into my checking account. I've made gifts to those same relatives when they needed money. The gifts came out of the same checking account. Was there some fraud involved?

Of course, in the first post, the OP talks as if it will all go into one account (owner not specified) and then be divided upon the parents' deaths. Which pretty much puts the lie to individual gifts to 6 kids.

anteater said:

Prove it! And none of OP's statements here about intentions count as proof!

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Remember, the road to h@ll is paved with good intentions.