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.

A revocable living trust is both simple and confusing at the same time.

It can take a while to wrap your head around it. It probably doesn’t help when you see a trust full of really big words and complex paragraphs. Trusts are boring to read, and trusts seem like something only rich people do.

You know, like in the movies? Or perhaps you’ve met someone who was a trust fund kid?

If your estate is like mine (and most the people I know), and you want to avoid the probate process, I can help you. If you own a home and have a few assets like a life insurance policy, a retirement fund, and maybe a couple of cars or toys, then a revocable living trust can be one tool in your estate plan that will save your family time and money by avoiding the probate process.

A Trust Is…

A revocable living trust is a tool. A proper estate plan is like Batman’s utility belt. Lots of different gadgets and tools are on that belt, and each one has a different function to help Batman in a time of need.

A revocable living trust is one of those tools in your estate planning “utility belt.” (There are other tools as well.) It’s made of paper and words, but it is a tool that is legally recognized as a way to help a person or a family preserve their property. We all work hard. We deserve the right to be able to take care of our property and keep the courts and prying eyes out of our business.

A trust can do that.

A trust is a private document. It allows you to stay out of the courts and keep your hard earned property yours. A revocable living trust is one type of tool that allows this, and it might be right for you if:

You would like to avoid probate, AND
You would like to keep your assets out of the reach of possible MediCal recovery, AND
You want to maintain control over all your property and assets while you are alive, AND
You can name successors who are responsible and willing to follow the trust documents when you are no longer able to do so yourself.

I like to tell my clients that a trust is like a treasure chest. The trust documents build the chest, and your “stuff” is the treasure inside it. While you are living, you have complete control over the chest, and the treasure inside it. You can change the contents, and you can even change the structure of the chest. Once you pass away, however, the chest is no longer changeable, and your successor trustee must now follow your instructions on what to do with the chest, and how to manage your treasures inside.

How It Works

If you think you need a revocable living trust, you and I will work together to determine if a trust will serve your needs, and if yes, what you would like your trust to say. A trust can be formed whether you are single or married, and if you are married, you may choose to come in singly or together with your spouse.

We will discuss your financial situation in as much detail that allows me to advise you properly. At this point, you will have attorney-client privilege, so this information stays confidential. We will also talk about what you envision for the future at certain time periods: 10 years from now, 20 years, etc. This helps us both know what is important to you so your estate plan can reflect your values.

After we dive in and talk about your assets, liabilities, your values, and your family, I will be ready to draft your documents, and your RLT will be one of those documents.** You will be one giant step closer to having a plan in place, and the peace of mind that comes from that is priceless for both you and your family.

**There are other documents you need for a fully formed estate plan. When you form your revocable living trust with me, those other documents are included in your plan. These include wills, powers of attorney, advanced healthcare directives, HIPAA forms, and other documents to get you organized and ready for the future.

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