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Protecting your Estate from Medi-Cal Claims

Aug 30, 2015 02:45PM ● By Jennifer Neys

by Daniel DuRee

            More and more often, end of life care, including long-term care, exhausts a substantial portion of a person’s assets. To add insult to injury, in certain circumstances, Medi-Cal can make a claim against the estate of a deceased person for services provided to that person while they were at the end of their life. With proper planning, certain assets can be legally transferred out of the estate without disqualifying the transferor from Medi-Cal eligibility. Generally, in order to protect the property from a later claim by Medi-Cal, the primary residence is the asset that is transferred. The following is a cursory treatment of how this can work. Please consult an experienced attorney before you make any such decisions.

            There are certain assets that are exempt for purposes of Medi-Cal eligibility asset testing. If an asset is transferred while it is exempt, it does not disqualify the transferor from receiving Medi-Cal benefits. A primary residence is exempt for Medi-Cal purposes if either the benefit recipient currently resides in the house or is in long-term care but intends to return to the home.  If either of these criteria are met, a Medi-Cal applicant or recipient may transfer the home out of their estate and effectively eliminate the possibility of a later claim against that asset by Medi-Cal. Generally, this is done by transferring the home to their children but in a very specific way. 

            If you decide that transferring your home out of your estate is advantageous, how do you then protect yourself to ensure that you always have the right to reside in your home if you no longer technically own it? This is accomplished with the assistance of an experienced estate planning attorney and involves the use of a grant deed with an irrevocable life estate reserved in favor of the grantor. Concurrently all of the grantees also sign an “acknowledgement and agreement of grantor’s right to return home.” If executed properly, a primary residence can be transferred out of an estate while still maintaining Medi-Cal eligibility and keeping the home safe from a later Medi-Cal claim.

            This has been a very basic overview of the topic. Please contact a licensed attorney regarding your particular situation. If you have any questions, don’t hesitate to call and schedule a free consultation with me in my office at 925-210-1400.