In this brief, Jerry Taylor narrates a real‑world estate‑planning scenario: an elderly mother who bought her house 30 years ago transferred title to her three adult children five years ago. When she later needed long‑term care and applied for Medicaid, the children wonder whether the home can be seized. Taylor explains that because the transfer occurred more than five years before the Medicaid application, the property is exempt from Medicaid recovery. However, because the children received the house as a gift, they inherit the mother’s original cost basis, not a stepped‑up basis. Consequently, when they sell, they must pay capital‑gains tax on the appreciation over three decades. Had the house been passed via inheritance (will or trust), the basis would have stepped up to current market value, eliminating capital‑gains tax. The monologue serves as a cautionary lesson on the tax and Medicaid implications of gifting versus inheriting real estate.
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