Dec
21
2016
0

Medi-Cal Recovery Will Be Limited to Probate Estates after January 1, 2017

We have recently blogged about the new legislation Governor Brown signed, effective January 1, 2017, which changes the rules regarding recovery by the state for payments it has made to nursing homes for Medi-Cal recipients. Under the old law, the only way we could avoid recovery was to ensure that there was nothing in the Medi-Cal recipient’s name at the date of his death. Under the new law, for Medi-Cal recipients who die after January 1, 2017, recovery will be limited to those estates that are subject to probate under California Probate Law. Assets transferred from a revocable living trust of the Medi-Cal recipient will not be subject to recovery under California Law, because assets in a revocable living trust are not be subject to probate.

For example, if Mary the Medi-Cal recipient leaves her home to her son in her will, the home will be subject to a probate. If the state paid $30,000 to a nursing home for Mary, the state will be able to recover the $30,000 from the probate of the home. If the home was in Mary’s revocable living trust at the time of her death, the state will not be able to recover against the home, because the home will transfer from the trust to Mary’s son, and will not be probated.

The new rules, effective for Medi-Cal recipients who die after January 1, 2017, also exempt certain assets from state recovery. For example, property transferred prior to death, that are no longer in the beneficiary’s name, are not subject to recovery. However, any transfers must be made within the Medi-Cal regulations in order to avoid periods of ineligibility when applying for Medi-Cal. Also, the state cannot recover against your life insurance policy as long as you name one or more beneficiaries under your policy. If you do not name a beneficiary, or if the beneficiary you have named dies before you do, there will be a probate to determine who the beneficiary is. The state will be able to recover against the probate.

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, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 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 long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help the older client and their families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

Jan
29
2016
0

Consider a Line of Credit On Your Home

The home is usually our clients’ most valuable asset. For Medi-Cal planning purposes, we have discussed in previous blogs how you can set up your Long Term Care Plan to ensure that you can transfer your home to your spouse or to you children without Medi-Cal penalty, and at the same time protect your home from a Medi-Cal lien.

But in the meantime, what if you need cash and you want to tap into the equity in your home? How will a line of credit affect your eligibility for Medi-Cal? Generally speaking, if you take a lump sum from the line of credit on your home, that lump sum may be treated as an asset which could negatively affect your eligibility for Medi-Cal. However, if you draw down on your line of credit as needed, for specific purposes, your eligibility for Medi-Cal should not be affected. So for instance, if you draw money down from your line of credit to pay for a roof repair, or to make payments for in-home-care, your line of credit would not be counted for Medi-Cal eligibility purposes should you need to go into a nursing home. As a result, it may be a good idea to check into getting a line of credit on your home. And by doing so, we should still be able to protect your home under Medi-Cal regulations.

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, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 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 long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

Feb
17
2015
0

Estate Plans For The Older Client Are Different

The plain vanilla estate plan, which most people have, is designed for the younger client. The main purposes of this estate plan are to avoid probate court and to provide for the distribution of assets to heirs upon death. It will also minimize estate taxes.

Estate plans for the older client include all of the death planning as stated above. But they also include long term care and disability planning, and are designed for asset protection.  Your elder law attorney will help you plan ahead in the event you or your spouse face long term care needs during your lives. We have seen some families spend hundreds of thousands of dollars for their care. Skilled nursing care can be as much as $10K or $15K per month. These issues must be addressed.

The elder law attorney helps clients and their families plan for and qualify for Medi-Cal. This state program helps pay for a stay in a skilled nursing facility in the event you use all of your Medicare days.  Through proper Medi-Cal planning, it is possible to qualify for Medi-Cal and transfer your home to your loved ones without a state lien, and without a step-up in basis. You can also plan to preserve your monetary assets under the Medi-Cal regulations. Your elder law attorney can also help you plan for and qualify for the VA Aid & Attendance Benefit, which can help pay for your in home care and assisted living facility costs.

In addition, for the older client, you can review how you may be able to make a tax advantaged transfer of a portion of your savings or other assets into a financial instrument that has a long term care benefit rider. Unlike traditional long term care insurance, if you don’t use this long term care benefit rider, you still have a financial benefit to transfer to your loved ones upon death.

If you have an estate plan that is created for the younger client, please feel free to contact Elder Law Attorney Michael J. Young for further discussion.

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, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 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 long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

Apr
19
2012
0

The Importance of an “Elder Law” Durable Power of Attorney

     Does your Financial Durable Power of Attorney (financial DPA) contain asset protection and government benefits qualification language? It probably does not, unless it was prepared by an elder law attorney. If you lose mental capacity, your spouse or children may be prevented from gifting your assets to themselves, in order to help you qualify for Medi-Cal or for the VA Aid & Attendance Pension benefit.

If your financial DPA contains any gifting language at all, it is probably limited to the annual gift tax exclusion amount, which is $13,000 per person this year. This language is usually of little help for Medi-Cal qualification. In addition, the language will probably not allow for gifting to the ”attorney in fact”, who is the person acting for you.  Specialized language is required under the law in order to allow for any gifting to the person acting as the “attorney in fact.” This specialized language usually does not appear in a “regular” financial durable power of attorney.

For instance, the home can easily be established as an exempt asset for Medi-Cal qualification. If the home is in the name of the Medi-Cal applicant who has lost mental capacity, and we want to transfer the home to a child and reserve a life estate to the applicant in order to avoid a Medi-Cal lien, most financial durable powers of attorney will not allow for this. Most financial durable powers of attorney will allow a transfer only upon receipt of consideration from a sale for fair market value of the real property.

To give another example, the Medi-Cal applicant, under the regulations, is allowed to own a life insurance policy, with a pay on death figure in any amount. However, in order to qualify for Medi-Cal, the applicant’s life insurance policy cannot have more than $1500 cash value. If there is a $5,000 cash value, for instance, the Medi-Cal applicant cannot qualify. The remedy is to liquidate the cash from the policy and then gift it out. What do you do however if the Medi-Cal applicant has lost capacity? We need to then look at the powers in the financial durable power of attorney. However, although most financial DPAs may allow for a liquidation of the cash value, they will not allow you to gift the cash out. The Medi-Cal applicant can only retain $2,000 in non qualified accounts, and if the cash from the policy cannot be gifted, it would have to be spent before qualification for Medi-Cal can be obtained.

The financial DPA in an elder law context, is also coordinated with the revocable living trust of the applicant. There should be specialized asset protection language in the trust, which refers to the financial DPA. This specialized language will allow the attorney in fact to “stand in the shoes” of the maker of the trust, for all purposes, including for Medi-Cal qualification. This technique is allowed by law, and provides the greatest amount of flexibility for the family who is helping the older person who has lost capacity, when we are applying for Medi-Cal.

Remember that if existing estate planning documents are not updated before the older person loses capacity, we may have to resort to a court proceeding to modify the language in the documents. This process is expensive and is not always guaranteed. The best approach is to pre-planning, and to have your estate planning documents updated as early as possible by a qualified elder law attorney, who practices full time in this area of the law. 

Written Michael J. Young, elder law attorney in Walnut Creek, CA. www.WalnutCreekElderLaw.com mike@WalnutCreekElderLaw.com. 1931 San Miguel Dr., Suite 220, Walnut Creek, CA 94596. 925-256-0298. Mr. Young serves Contra Costa and Alameda Counties, including the cities of Walnut Creek, Alamo, Danville, Concord, Brentwood, Pleasant Hill, Antioch, Clayton, etc. Mr. Young advises clients regarding Medi-Cal, nursing homes, asset protection, the VA Aid and attendance pension benefit, and long term care planning. Mr. Young is a Concord Elder Law Attorney with offices in Walnut Creek, CA.

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Oct
17
2011
0

What Is The Difference Between Elder Law and Estate Planning?

I practice Elder Law and represent the older client and their families. When clients come to see me, their concerns are not so much about what happens when they die, but more about ’What happens if they don’t die.’

Of course, they want to make sure that their assets pass to their family with a minimum of expenses and taxes. But the bigger and more complicated question is, “What happens if I don’t die?” As we know, Americans are living longer all the time. The infirmities of old age may require that we have in home care assistance, or go to an assisted living facility, board and care home or eventually a to a nursing home.  We are of course concerned about how we pay for these costs. A regular estate plan does not address these needs. An elder law attorney can prepare a long term care plan for you, and address these needs. He will also address the concern of passing assets to their family.

To put it another way, a regular estate plan insures that if you die, your assets will be passed on to your family the way you want. The operative word is “if”. A  regular estate plan will not help preserve assets so that hopefully there will be something left when you die to pass on to your family. As we know, the assets of the older client could be depleted by a nursing home stay or lengthy illness, which could leave their spouse or heirs with nothing.  

If you have sufficient assets to pay for long-term care or nursing home costs without running out of funds, then a regualr estate planning attorney may be all you need. However, if you cannot afford the cost of a lenghty nursing home stay, of around $90,000 per year or $180,000 per year for a couple, or more, then an elder law attorney would be able to help you.

For a real life example, Mary and Jim have about $300,000 in assets and a home worth around $500,000. Jim needs assistance and uses a wheelchair. Mary has been providing for his care, but recently has shown signs of forgetfulness and confusion. She has been diagnosed by her doctor as having early signs of dementia.   

An estate plan is of course important to Jim and Mary, but this won’t help them deal with the problems they are presently dealing with. They want to tackle the issue of how they will be able to afford the cost of nursing home care should either one or both of them need it. They want to establish how they will be taken care of should Mary’s dementia become more advanced. They want to find out if if they can stay in their home with assistance.

This couple needs a life plan, specific to them, to meet their needs for the future. Jim and Mary need to seek the advice of an elder law attorney.

Written Michael J. Young, elder law attorney in Walnut Creek, CA. www.WalnutCreekElderLaw.com mike@WalnutCreekElderLaw.com. 1931 San Miguel Dr., Suite 220, Walnut Creek, CA 94596. 925-256-0298. Mr. Young serves Contra Costa and Alameda Counties, including the cities of Walnut Creek, Alamo, Danville, Concord, Brentwood, Pleasant Hill, Antioch, Clayton, etc. Mr. Young advises clients regarding Medi-Cal, nursing homes, asset protection, the VA Aid and attendance pension benefit, and long term care planning. Mr. Young is a Concord Elder Law Attorney with offices in Walnut Creek, CA.

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