Mom can no longer drive and I'm cancelling her car insurance. She's decided to give her car to her grandson/my nephew. I suggested selling it to him for $1 as a symbolic gesture. But then I thought will there be any sort of ramifications if she sells the car for less than its worth? Or is there a financial benefit to her gifting it to him? Not sure and thought I'd reach out to you guys. Thanks!
I see from your profile that your Mom is in her 80's and has Alzheimer's/Dementia so unless she is wealthy, Medicaid might be in her future should she need to live in a nursing home facility.
If Medicaid could become an issue down the road, gifting would likely be set at whatever the BlueBook value of the car is. If BBV is low enough not an issue, but if the car has value that combined with moms $ assets takes her over the 2K allowd by most states in assets, it will pose a transfer penalty by Medicaid. If the car has issues - like it has body damage, transmission is out, etc- you kinda need to have that documented by photos and paperwork from mechanic to be able to prove lower value IF it becomes an issue for Medicaid.
My mom gave her old old behemoth of a Buick to worthless nephew when she went into IL. Then when she went into a NH 3 years later, the car was brought up by the caseworker. I had to get a statement from the mechanic as to the status on the car. I was lucky in that these guys have been there forever, both mom & dad use them & they remembered her & she kept all old paperwork on repairs.
5 years = 2021 if mom applied today. It's a long time to keep documentation.
I'm not sure I understand the symbolism of the "peppercorn" purchase? How is that better than his grandmother generously giving him a car and his being duly grateful?
Knowing the rate will enable you to figure out what the penalty period will be & plan for. The formula is not just the $ amount per se but the reinbursement rate over time. So for TX, 15K would mean about 97 days of private pay to work out penalty. BUT if her state reinbursement rate is $ 325 a day, it's only 46 days.
Hopefully you can get worthless to pay this.