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.