Grandparent Contributions to a 529 College Savings Plan–Part 3
This issue of the Koldin Report E-Newsletter continues the review of grandparents contributing to a 529 plan for their grandchildren.
In the last two issues we discussed the Medicaid consequences of 529 plans if a grandparent required long term care in a nursing home. These two newsletters along with many of our past newsletters are on our website at http://www.koldin.com/newsletters.
We received an inquiry from one of our readers asking whether the 5 year lookback rule for transfers would apply if he transferred ownership of his 529 plan that he set up for his grandchild to now be owned by the grandchild’s parent.
The answer is YES. This change of ownership of the 529 plan would be considered a transfer by the Medicaid agency and subject to the Medicaid transfer penalty rules. If the change of ownership of the 529 plan was made within 5 years from the date of the Medicaid application, the Medicaid Agency would presume that this transfer was made for the purpose of qualifying for Medicaid and subject to a transfer penalty.
However, under the Medicaid transfer rules, the Medicaid applicant does have the opportunity to prove that the change of ownership of the 529 plan was for a legitimate purpose and that Nursing Home care was not foreseeable based on his/her good health.
The Koldin Law Center has won Fair Hearings against the Medicaid Agency by proving that various gifts were made while still healthy and for purposes other than to deplete life savings to qualify for Medicaid.
For example, our office successfully defended the transfers made by an 89 year old woman who fell and required Nursing Home care. She was in good health before falling. During the 5 years before falling, she made numerous gifts to her son who was in poor health and often unable to work. Her gifts were to help him pay his mortgage, insurance and property taxes along with some household expenses. She also made gifts to her grandchildren to help them with college.
The Medicaid agency penalized those gifts on the grounds that based on her age, an 89 year old should foresee the possibility of needing Nursing Home care. New York State, in its Fair Hearing decision, reversed the County Medicaid agency and held that the gifts were legitimate and not for the purpose of depleting her assets for Medicaid.
Therefore, the Medicaid law does make gift giving riskier for grandparents, but with the right facts, such gifts can be defended.
At the Koldin Law Center, P.C., located in East Syracuse, New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care. Our attorneys are available to discuss your estate planning options, including the advantages and disadvantages of Revocable Trusts and Irrevocable Trusts, along with other estate planning considerations including a Will, Power of Attorney, and Health Care Proxy. We do not charge a fee for the initial consultation. We welcome your children, family attorney, accountant, and/or financial planner to be present at the initial consultation.
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Remember that the Koldin Law Center offers many services for clients of all ages. Our services range from basic estate planning such as a simple will to complex estate planning including asset preservation planning.
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