When you get older, you might have additional medical expenses that you don't have now (i.e., a home healthcare provider or assisted living). If you qualify, you can get assistance with these expenses through Medi-Cal, California's Medicaid program. However, some people are worried about what will happen to their homes if they receive Medi-Cal benefits.
What happens to my house?
Your home is exempt from the determination of your Medi-Cal eligibility. However, after you die, Medi-Cal, through the Estate Recovery Program, may seek repayment of expenses by making a claim against the property in your estate.
Is there a way to avoid this?
Yes. One way to avoid this is to execute a revocable living trust and transfer your home to the trust. This benefit has only been available for a couple years, due to a change in the law, but it is hugely helpful to Medi-Cal recipients.
Because Medi-Cal can only collect against your probate estate, assets that avoid probate are not subject to recovery. Because assets in a living trust avoid probate, your house is safe for your beneficiaries.
Should I wait until I'm on Medi-Cal to draft a living trust?
No, you should not wait. Protection from Medi-Cal recovery is only one benefit to having a living trust. If you die before you draft a trust, your estate will still have to go through probate. Medi-Cal recovery aside, probate is still a costly hassle for your heirs.
Additionally, if you wait until you are receiving Medi-Cal benefits, you may no longer have sufficient mental and legal capacity to execute valid trust documents. You should execute a living trust while you are still capable of making your own decisions. If you lose capacity, a conservatorship will be required to manage your assets.
A living trust has many benefits: keeping your estate out of probate, avoiding the need for a conservatorship, and providing for an orderly distribution of your estate. And now, with the change in the law, a living trust can prevent Medi-Cal recovery from taking your home from your heirs.
Helix Law Firm can draft a living trust for you
If you would like to set up a living trust, we can help. A revocable living trust is one part of an overall estate plan, which also includes a pour-over will, durable power of attorney, and advance healthcare directive.
If you're interested in learning more, please call us at (619) 567-4447 to schedule a free consultation.