Grateful for any guidance. Received a large check from the consignment of coins from my father's collection- over $25k. The money is for the benefit of my mother. Rather than deposit the check into her savings and then funding a CD-can I open a CD directly with the bank check which is made out to me? I would make the CD joint with her.
Answers
If not part of estate…What was the face value of the coins during inventory? How many were silver? That’s a starting point for cost basis (most of us have had collection of coins over the years…but not purchased!). Second you or…receive a 1099? If 1099 to you, and no change get prepared to show on your 1040 with face value (adjusted for silver, etc coins) of coins for cost and pay the tax! Use the funds for whatever but not in mom’s name unless you want to make gift to her and potentially “screw up” Medicaid! But didn’t daddy already do the latter if the funds are hers no matter what!
It sounds to me like you are talking of a so-called “Medicaid trust” so the money can be gotten out of her name and protected from consdieration fro applying for Medicaid. But you want to avoid the look back for transfer of money out of someone’s name in order for them to qualify for Medicaid to cover longterm care.
OK, first, I note, I am not a lawyer, you can double check all I saw with an estate lawyer.
I think much of any answer would involve the probate, and your power in that to set up anything for your mother’s benefit rather than for her ownership. You need an estate lawyer to help wind your way through that. Laws on who automatically gets the money after someone dies intestate are at play there. You are talking of switching that ownership from your mother as beneficiary to someone else, yourself, or some other entity. Probate will decide that.
For the Medicaid part, it generally would involve a so-called “Medicaid trust.” But that is a separate entity, neither you nor anyone else would own that money, the trust would. Your mother would not have any control over it, only the administrator would, which could be you, if the probate court agrees, if you can even do it straight out of probate. (You might be able to do it indirectly via probate, see below.) If it pays out of the estate to your mother, as your are talking of with that check, it is her’s, and you do have to go on the record about that, you ware in probate.
It sounds like you are hoping the look back would not see the probate records of dispersal — even in any estate tax filing. That seems kind of dangerous.
As for any capital gains from that sale of the coins, they should be wiped out or nearly so, little or no capital gains tax due, as upon the father's death, a new basis would be started at their value on the day of his death. Only capital gains after your father's death would be a tax issue, and chances are, that would be little or negligible, because it would be based on the value of the coins at death as compared to how much they were sold for. You could actually have a capital loss. But trying to hide a capital gain, if there were any, by involving your name on the account, as you suggest, could be tax evasion. But again, in this situation, there should be little or no tax to evade.
You're actualy looing for a way to avoid this money been seen in your mother's name as of this time, in order to avoid the look back for an application for Medicaid LTC.
A second approach could be that in probate, your mother turns down her inheritance, in which case it would then go to other beneficiaries, whomever presumably already was entitled to a share under laws involving dying intestate. That might be your best option, depending on whom those people are, maybe you only — but it sounds like it might be too late. Maybe not, since the check in not yet deposited. Ask an estate lawyer, and now. Amend the probate filings to show your mother has turned down the inheritance. Then, others could have the money legally, maybe only you, your mother would not, but if friendly, the others could then contribute to a “Medicaid trust” for the benefit of your mother. This involves plenty of trust.
As for your talk of co-mingling in a joint account, and presumably later reporting any income from that under your Social Security number only, well, for one, your mother might not owe any capital gains tax on the sale of the coins, as capital gains are wiped out on the death of the decedent’s death. The asset gets a new basis of its value on the day of death. It is unlikely she will be taxed on the inheritance. But the one under whom’s Social Security number any income on it is reported is considered to be the owner of that money, and I presume you are saying that would be you. If you, that would mean she gave it to you -- the check that was deposited was toher namek and in that amount, it is reported by the bank to the government.
When money in a joint account is owned separately, the primary account owner under whose Social Security number the income is reported for tax must give a 1099 to the joint owner and that joint owner pay his/her share of the tax on their tax filing. Of course, when someone gives someone else money over the amount at or under the amount allowed annually without any reporting, gift tax filings are required. There will be interest to report for taxes, and if you report it all under your name, gift taxes could come into play. All this could unravel when the Medicaid look back comes along. It is dangerous, you are proceeding under the strategy of hoping they won't look at what they should be looking at. And if they see it, it could lead to a series of legal problems, from tax evasion to gift tax issues, to fraud, to even conspiracy. Oh, chances are they would simply say no to the Medicaid application. But it is dangerous.
There are a lot of things at play here. But getting it to your mother via her turning down the inheritance, and it going to other “trusted” people who will take it, and then later donate to a “Medicare trust” for her seems the best way to avoid illegalities.
You might be able to nix that check, since it has not been cashed, and get the probate court approval for your mother to turn down her inheritance. See about filing new information with the probate court saying that your mother has turned down the inheritance. That would be legal. This other approach is dangerous as illegal and relying on the government, both state and federal, not noticing.
Why do it a problematic way when there might be a perfectly legal way that, as legal, would be certain to allow for Medicaid?