Yes and no. As with many areas where money and law intersect, it all depends on your goal. Let’s clear up a few things.
1. What is the $13,000 rule anyway? You can give up to $13,000 per person, anyone, not just your family, per year, without paying any gift taxes and without this affecting your estate taxes when you die. In other words, you can give up to $13,000 per person with no gift tax or estate tax implications. You can also give away more than $13,000, but just be sure to talk to your CPA about whether that would be a good idea for you. P.S. That figure is set to rise to $14,000 in 2013.
2. But are you really in a position to give money away? It costs a lot of money to get old in this country. As you age, if you want to stay at home or maybe move to assisted living but stay out of a nursing home, then you will need to use your own savings for your care. I can help you explore veterans’ benefits and MassHealth benefits for non-nursing home care, but even with these you will need to rely on your own savings. I am not a big fan of parents gifting money to kids. Keep your money. You will need it to stay out of a nursing home.
3. Doesn’t Medicaid let me give $13,000 to each of my kids and then get nursing home care? No. The $13,000 gift rule and the Medicaid nursing home rules have absolutely nothing to do with each other and were written for entirely different populations. If you gift money to your family and then within the next five years ask Medicaid (MassHealth) to pay your nursing home bill, they won’t. Even if you have a history of giving money to your children, as you age you need to reconsider this. Perhaps this is the year to tell your kids that the gifts will stop coming. If you feel a bit guilty about this, keep in mind that by keeping your savings intact, then down the road you will be in a position to hire help, making things a little bit easier for your kids.