Cash Gifts

[cody]

What is the name of your state? NY

My elderly father is getting a large cash gift from a wealthy very elderly aunt. Both live in NY state. From what I can see any federal tax would be paid by the aunt. I do not know if there is a NY state gift tax or not.

Problem- My father is low income and has a Medicare supplement that is based on his income. He does not want the cash gift to affect his Medicare supplement so he wants to give the cash to me and my brother now.

1) Will accepting the cash gift affect my fathers Medicare supplement if he immediately writes my brother and I a check for the amount and gives it away.
2) Will my father have to pay a gift tax on the money once he gives it to us. His Aunt has just paid the tax.
3) I live in VA. Will I have to claim the cash as income or pay taxes to my state or the federal government?

Any suggestions on how this can best be handled would be greatly appreciated.

 

[xylene]

Explain to Auntie the fathers economic reality and advise her to refrain from making ANY gift until she and your father and a lawyer with estate planning and medicare experience look at the situation.

Explain it this way:

"Auntie, my dad just loves you and is thinks its so wonderful that you want to give him this money. But big transfers of money are complicated, and always involve the government. It doesn't mean you love him any less if we make sure the government doesn't take a massive bite they don't deserve or that this hurts his benefits. We've set up a meeting with Attorney Goldmann (insert some trustworthy firm) so we can come up with the best action plan."

Doing this planning with an expert would cost a tiny fraction of the gift, and would result in savings and peace of mind.

Something to note: In estate planning, their are often advantages to waiting until death. I don't say that to be morbid, but is true. Many estate planning experts will push this angle. Auntie seems to want to give a gift to be enjoyed while she is alive. Be sure to look at all the angles, and if you aren't comfortable with a plan or a lawyer, well, take it elsewhere.

You don't take it with you. There is no afterlife to smile down from heaven on. If it is important to her to see the gift made, DO THAT PLAN. Taxes be damned. Because you don't get to enjoy it when your dead.

 

[tranquility]

xylene's advice is sound. As to the questions you asked, if your father accepts the gift, it's his. If he immediately gives it away, it was still his and the legal ramifications will have to be dealt with.

 

[Dandy Don]

What is the amount of the gift?

This question belongs on the tax law message board.

DANDY DON IN OKLAHOMA ([email protected])