There are two mistaken beliefs about a person’s house when they go on Medi-Cal to pay for their nursing home cost. The most common misbelief is that the state will take your home when you die. That’s wrong if you plan properly. The second misbelief is that the home is an exempt asset, and therefore you can get Medi-Cal to pay for the nursing home even if you have own a residence. This belief is part true and part false. The residence is an exempt asset, but the state wants to recover their payments after the elder’s death by placing a lien upon the residence so that the get paid. This action is called “estate recovery.”

Medicare is what you get when you turn 65 years of age. Medi-Cal requires that you meet certain financial eligibility rules. There are thousands of people statewide in nursing homes with their monthly bill being covered by Medi-Cal, but to be eligible for Medi-Cal to pay for the nursing home, they can only have a maximum of $2,000 of countable assets in their name. There are two ways to do this. First, you could spend all of your money on care and then become eligible, or second, you could work with a qualified elder law attorney to protect your assets with a plan that’s allowed by California law.

The sad cases are when people come to me too late and tell me, “We just finished spending the last of Dad’s $400,000 on the nursing home payments, and we don’t know what to do next.” The families in those cases are always stunned to find out that the elder’s money could have been protected. They look at me and ask, “Why didn’t anyone tell us about this three years ago?”

Medi-Cal is California’s name for Medicaid, and our laws here are different than the laws in the other 49 states. Our laws allow people to protect their residence, vacation homes, rental properties, farms, and other financial assets, . . . but only if they plan properly.

Don’t lose your hard-earned money to nursing home payments, and don’t let the state recover costs against the elder’s residence. Plan ahead by working with a qualified elder law attorney.

Do you already have a Trust? Is it a Living Trust or Revocable Living Trust or a Family Trust?

If you already have a Trust, you then need to answer the following questions:

How old is it?

Do you have signed copies?

Is it up to date?

Does it consider the current tax laws?

There was a major tax law change at the beginning of 2012, and many people with older Trusts aren’t aware that their Trust may not be appropriate for their current family situation. You need to have a professional Estate Planning Attorney read your Trust together with you and explain how it will work when you’re incapacitated or die, and how the tax law changes may make your current Trust obsolete.

You need to think about who will be making the decisions for you if you’re incapacitated, and who will make the decisions for your estate after you die. Have you named the right people? Are they likely to outlive you? Have you named alternates in case those people can’t act for you? I frequently have people coming to me with complaints about an older Trustee who is making poor decisions and won’t resign. What does your family do then? Go to court? Needlessly spend thousands of dollars on a legal dispute?

Did you lend $50,000 or $100,000 to one child who has never paid it back? Does your Trust document consider this to make sure that your wishes are known? When the son of one my clients found out what his father’s Trust said, he shredded all of the documents so that he wouldn’t have to pay back the debt and he would receive much more than his brothers and sisters. Since we keep copies of our clients’ documents, we just provided a copy set to the family and the son wasn’t allowed to “double dip” from his parents’ wealth.

If you have a Trust, make sure you know what it says, and make sure that it’s the right Trust for you.

 

 

 

Most of the nursing homes in Santa Clara County currently charge residents $11,000 to $12,000 per month. Are you prepared for that cost? How long will you or your loved one be there? Two months? Ten months? One year? Five years?

The longest stay I’m aware of is over 20 years. That’s a huge expense.

How will you pay? Private pay? Long term care insurance? Medi-Cal?

What most people do not know, is that there are elder law attorneys who specialize in Medi-Cal planning to protect the family assets. Those of us who practice in this area work to make the clients eligible for Medi-Cal benefits and protect the family assets so that they can be used for the benefit of the other spouse and then eventually pass to the heirs of the ill person.

Yes, it’s true that Medi-Cal will cover your long term care costs in a skilled nursing facility even if you own your house, but if you own the house at the time you die, the State of California will seek repayment of your benefits by placing a lien on your house. The residence is still protected after the Medi-Cal resident’s death if the surviving spouse is living there, but the State of California has been sending out “voluntary liens” to the surviving spouse. If he or she is confused after the death of their spouse, and they happen to sign the lien without a full understanding of the result, the house will be encumbered with a lien from the state.

If you have a family member or close friend in a nursing home, or you think that a nursing home may be in their future, get some expert legal advice for proper planning. In one case I handled, the entire value of the house would have gone to the state, and now it will pass to the two children of the nursing home resident.

Know your rights and seek proper legal expertise to help guide you in establishing the right estate plan for your family. Your family will be grateful you did.