By Loulena Miles

Partner, Miles & Torres Associates

In California, new Medi-Cal recovery laws just came into effect and will apply to those who die on or after January 1, 2017. The new rules mandate that the State’s right of recovery will only apply if the beneficiary dies with assets subject to probate. This is big news for people who are on Medi-Cal, or have family members on Medi-Cal, and are concerned that the State will seize their home when they die.

While even before this law took effect, the State could only make a claim for reimbursement against the home of a beneficiary that had passed away under certain conditions; the new rules make it much simpler to protect a home and other property from estate recovery.

For estate planning purposes, this means that Medi-Cal beneficiaries who put their assets into a revocable living trust will not have their assets subject to Medi-Cal recovery. Before this law, there was no guarantee that assets held in a revocable living trust would be protected from Medi-Cal recovery unless other strategies were in place that often involved loss of ownership or control over your property. Revocable trusts have the distinct advantage of allowing you to retain full control and ownership of your property during your lifetime.

There are many other reasons to put your home and assets into a revocable living trust such as simplified transfer of control of your assets if you become incapacitated, efficient management and transfer of your assets upon your death, administration of assets for minors or loved ones after you die, and potential tax benefits for your heirs.

Although a revocable trust provides you with many benefits, you do not need a trust to take advantage of the new Medi-Cal recovery rules. Holding property in joint tenancy, life estates, and other types of transactions will also keep your property out of probate court and may accomplish the same result. But there can be serious drawbacks to transferring ownership of your property during your lifetime, such as loss of control over the property and adverse tax consequences that must be seriously considered before such a transfer occurs.

For more information, you can contact the California Advocates for Nursing Home Reform at: http://www.canhr.org/publications/PDFs/Medi-Cal_Recovery.pdf and give our law office a call for a free consultation at 415-496-9396.