Discussion:Fund for medical expenses

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Discussion Forum Index --> Tax Questions --> Fund for medical expenses

Jeffclk (talk|edits) said:

19 October 2006
I have a client that has gone through a devastating life event where both of her sons were shot. One son died and the other is permanently disabled. Her neighbors started a fund to raise money for the sons medical expenses. They did not set up any kind of trust or entity to handle the monies received. The people that contributed money were not told that they had made any kind of charitable contribution.

My question is - How de we handle this money? It appears to me that the family received a gift and therfore there is no taxable income. I also believe to honor the donors intentions, we should set up a trust for the medical expenses of the son and use the money for these expenses.

Are there any other alterantives? Suggestions? Any help would be appreciated.

Riley2 (talk|edits) said:

19 October 2006
Yes, this is a gift. Not sure about the trust issue, since that would be a legal question.

Bengoshi (talk|edits) said:

19 October 2006
The income (if any) earned on the gifts may be taxable though. Would it be worth the cost to set up a trust or some entity for these monies? I'm not sure, but that could be quite expensive and take away from what's there for medical care. But I do see your concern over properly accounting for the funds to the donors.

Dennis (talk|edits) said:

19 October 2006
A lot depends on the numbers as well as medicaid eligibility. Trusts can be expensive and a pain to administer. Still, a third party supplemental needs trust is pretty much boilerplate these days.

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