Medi-Cal Estate Planning

For the last 20+ years, California has attempted to recover some of the fees it has paid out on your behalf if you are a recipient of Medi-Cal services. (Medi-Cal is California’s version of Medicare/Medicaid.) While personal opinions may differ on the validity of this recovery, the fact of the matter is, Medi-Cal recovery after your death had the potential to wipe out your estate and your children’s ability to inherit your assets.

One way around this was to put your home into an irrevocable trust. Putting anything into an irrevocable trust means it is not really yours any longer. Many people created “Medi-Cal Asset Protection Trusts,” a type of irrevocable trust. You would name a trust protector, and typically you were able to still live in the house until your death. After your passing, it would be given to your named beneficiary, but it would be untouchable my Medi-Cal because you no longer had control over it. This type of trust was expensive to form and maintain, and a person had to be confident that they would never need to sell their home, since they were relinquishing incidents of ownership to it.

NO MORE.

The good news is that the State of California enacted a few laws that took effect on January 01, 2017. These laws (found in SB 33 and SB 833) apply to anyone who has died or will die on or after January 01, 2017, and it limits what recovery can take place by the state against your assets. (If you have a family member or friend who passed before this date, the old rules of recovery still apply.)

Essentially, the state can recover for certain services it provides against your probate estate only.

Having a revocable living trust keeps your assets out of your probate estate…so you have shielded your assets from the state once again, preserving as much as possible for your heirs. This recovery limitation also applies to those properties that have been named in a Transfer on Death Deed, or held in joint tenancy.

This is great news for everyone who has already planned ahead! There is no need to form a special trust in the future, giving up control of your property when you may have never needed it in the first place.

Remember, a revocable living trust (with all the accompanying documents) is your map to asset protection planning. If your future changes and you need to add to, change, or in any other way alter your trust, you are free to do that. You keep control of your assets during your life, but trust becomes irrevocable on your death so that your trustee or beneficiaries can’t change your plans. It is the best gift you can give your family.

If you would like to read more about this on your own, I have found a consumer friendly PDF guide on this topic, located HERE.