Mar
10
2015
0

Will Medi-Cal Let Me Make Gifts To My Wife Without Penalty?

Will Medi-Cal Let Me Make Gifts To My Wife Without Penalty?

YES!  For qualification for Medi-Cal, there is presently a 30 month look back period for making gifts. But this look back period does not apply between spouses. We have discussed in previous blogs how to properly transfer the home between spouses in order to avoid a state lien after the Medi-Cal recipient passes away. There is no penalty period for this transfer.

The ill spouse and the well spouse can both have any amounts of qualified funds, like IRAs, when qualifying for Medi-Cal. These are called “exempt assets.” The ill spouse can then have no more than $2,000 in regular or “non exempt” assets. The well spouse can have up to $119,220 in regular assets. So for qualification for Medi-Cal, the ill spouse will generally transfer her regular assets to the well spouse, so that the ill spouse has no more than $2,000 in regular assets.

If the well spouse then has more than $119,220 in regular assets, he can gift a portion of that amount to other individuals, to get him down to $119,220, but penalty periods can apply. Medi-Cal will ask if any assets have been gifted within 30 months prior to qualification for Medi-Cal from either spouse to other individuals. The gifts from the ill spouse to the well spouse do not create penalties. But any gifts to other individuals, like family members, can create penalty periods for qualification for Medi-Cal.

To figure out the penalty period, divide the amount of the gift by $7,628. The answer will give you the number of months of ineligibility for Medi-Cal. So, if $35,000 is gifted from mother to son within the last 30 months, that amount is divided by $7,628. The solution is 4.58 (rounded down to 4) months of ineligibility. So if the gift was made in October 2014, the Medi-Cal applicant would not be eligible for Medi-Cal until February 2015. Your elder law attorney can help you lower the months of ineligibility caused by gifting, through long term care planning. Do not attempt any transfers without the advice of your elder law attorney.

Your elder law attorney will help you to increase the quality of your life, and not just figure out who-gets-what after you pass away. For additional information, you can contact your elder law attorney Michael J. Young. This information is not to be taken as legal advice, and you are advised to see your elder law attorney. At the law offices of Michael J. Young, 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA http://www.WalnutCreekElderLaw.com, 925-256-0298,lawyoung1@gmail.com, we practice elder law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with Sustainable Estate Planning TM, long term care planning, asset protection plans, special needs trusts, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order to help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension Benefit.

Mar
06
2015
0

Will Medi-Cal Take My Home?

We often receive calls in our office from people asking, “Is Medi-Cal going to take my home?” The answer to this question should be NO through proper long term care planning with your elder law attorney. To understand the issues involved, we must first look at the Medi-Cal regulations. In addition we must confirm that you have the required asset protection and government benefits planning language you will need in your revocable living trust and financial durable power of attorney. This language is required for protection of your home and other assets from a Medi-Cal lien if you lose mental capacity. We have discussed in previous blogs how the language in estate planning documents is different for the older client.

Under the Medi-Cal regulations, your home can generally be confirmed as an “exempt asset” when qualifying for Medi-Cal. The Medi-Cal applicant, or their representative, must confirm “an intent to return home” on the Medi-Cal application. Our clients also confirm “an intent to return home” in their long term care plan prepared by our office. Your home is also exempt for qualifying for Medi-Cal if a spouse, minor, blind or disabled child lives in the home. There are also other ways to confirm the home as an exempt asset.

So, you can generally qualify for Medi-Cal and keep your home. But the next issue concerns what happens if you die after you have been on Medi-Cal? After you die, Medi-Cal will want to  recoup from your estate the money they have paid to the nursing home on your behalf. They will follow a lien on your property until you die, and then pursue to collect from the equity in your home. If you have a surviving house in the home after you die however, the state will not pursue collection against the home until your spouse dies.

You should keep in mind that the state can only collect against assets, like your home, that are in your estate when you die. They will also collect against your interest in the home when your spouse dies. So, what would happen if you transfer the home out of your estate before you die? Once the home is confirmed as an exempt asset, you can transfer your title interest in the home to your spouse or to another family member, for instance. There is no transfer penalty for transfer to a spouse. There is also no transfer penalty to another family member after the home is confirmed as an exempt asset. Your elder law attorney will help you regarding this planning AND any real property transfer. He will also advise you on how to avoid capital gains tax on the transfer and ultimate sale of the home, and how to avoid a re-assessment by the county tax assessor upon transfer of the home. If you transfer your interest in your home to your spouse before you die, the state will not be able to recover against the home. If you transfer your interest in the home to another family member, the state will not be able to recover against the home when you die. You will require the services of an elder law attorney for this planning and to make these transfers.

If you have lost mental capacity, can you transfer your title interest in the home to your spouse or other family members? If you do not have a long term care plan prepared by an elder law attorney with the required language in your revocable living trust and financial durable power of attorney, the answer is probably NO. The majority of estate plans do not include the appropriate asset protection language in the trust and financial durable powers of attorney that are required to make this transfer upon incapacity. It is possible to go to court and obtain an order reforming your trust and financial durable power of attorney to make the transfer, but this process is time consuming and fairly expensive.

Your elder law attorney will help you to increase the quality of your life, and not just figure out who-gets-what after you pass away. For additional information, you can contact your elder law attorney Michael J. Young. This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the law offices of Michael J. Young, 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA http://www.WalnutCreekElderLaw.com, 925-256-0298,lawyoung1@gmail.com, we practice elder law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with Sustainable Estate Planning TM, long term care planning, asset protection plans, special needs trusts, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order to help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension Benefit.

Mar
02
2015
0

What assets can you keep when qualifying for Medi-Cal?

What assets can you keep when qualifying for Medi-Cal?

Your Home: Your home is generally exempt, or not counted, in determining eligibility for Medi-Cal. The Medi-Cal applicant, or their representative, must express an intent to return home. This is confirmed on the Medi-Cal application. It is also confirmed when you execute your estate planning documents with your elder law attorney. The home is also exempt if a spouse, minor, blind or disabled child lives in the home. You will most likely want to transfer your interest in the home to your spouse or child in order to avoid a recovery by the state against your home after you die. You will need the help of your elder law attorney regarding an transfers concerning the home.

Personal Property: Your household goods and personal effects are totally exempt for determining eligibility for Medi-Cal.

Cars: Medi-Cal will give you an exemption for one car.

Jewelry: When one spouse is in a nursing home, all jewelry is exempt. For a single person, wedding and engagement rings and heirloom jewelry are exempt.

Whole Life Insurance: You cannot have more than $1500 cash value in your policy. If there is more than $1500 cash value, it must be reduced.

Term Life Insurance: Term life insurance is totally excluded.

Burial Plots: Burial plots are totally excluded:

Prepaid Irrevocable Final Expense Trusts: You can put any amount into an irrevocable final expense trust for your funeral and final expenses. These trusts are used for general estate planning, but are also helpful for planning for Medi-Cal eligibility. You can “spend down” a portion of your assets by transferring them to a final expense trust in order to create eligibility for Medi-Cal. You can ask your elder law attorney about this trust, and there is generally no fee for its creation and implementation.

IRAs and work-related annuities: If the IRA is in the applicant’s name, the IRA is exempt if the applicant is receiving periodic payments of interest and principal. If the IRA is in the well spouse’s name, it is totally exempt.

Community Spouse Resource Allowance: The spouse at home, called the community spouse, can have up to $119,220 in liquid assets, plus the home, IRAs and other exempt assets listed above.

For additional information, you can contact your elder law attorney Michael J. Young. This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the law offices of Michael J. Young, 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA http://www.WalnutCreekElderLaw.com, 925-256-0298,lawyoung1@gmail.com, we practice elder law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with Sustainable Estate Planning TM, long term care planning, asset protection plans, special needs trusts, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order to help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension Benefit.

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