Any gratuitous movement of money or assets to another person is a transfer of assets (a gift) and has potential Medicaid and tax consequences. It’s true that any amount up to the annual gift tax exclusion (currently $14,000 per person) will result in no gift tax, but all gifts are subject to Medicaid penalty within the five-year look-back period. Proper Medicaid Asset Protection planning can enable you to make transfers in ways that lead to eligibility in less than five years (see Avoid Medicaid’s Look-Back Period). Many gifts can cause capital gains tax consequences to the recipient upon future liquidation, but Asset Protection Trusts can hold those assets until after your death and give your loved ones a stepped-up cost basis and eliminate the tax.