Major Reform to CA Medi-Cal Estate Recovery – On June 27, 2016 Governor Brown signed legislation sponsored by which will make it easier to qualify for Medi-Cal without having to spend yourself into poverty. This new bill reduces the scope of California’s Medi-Cal Estate Recovery against the estate of deceased Medi-Cal beneficiaries.
Medi-Cal can no longer recover from the surviving spouse’s estate with respect to Medi-Cal recipients who die on or after January 1, 2017. The surviving spouse of such a person will not have to transfer any assets received from a deceased spouse’s estate to safeguard them from recovery claims against the surviving spouse’s own estate, when the surviving spouse later dies. This is a major victory for those who advocated Medi-Cal Estate Recovery reform.
Medi-Cal can no only proceed against assets that are part of your “probate estate”. The probate estate is limited to those assets that would be included in a probate were the deceased recipient’s estate to be probated. Presumably this applies regardless of whether or not the deceased recipient’s estate is ever actually probated or not; that is, assets inside the estate of a decedent which is appraised at under the $150,000 probate threshold would presumably be considered to be a part of the decedent’s probate estate for Medi-Cal estate recovery even though no probate is required.
This offers a planning opportunity: Assets that transferred into a living trust prior to your death are not subject to Medi-Cal Estate Recovery claims against your estate. This is also true for assets held as joint tenancy estates and or life estate assets – these pass automatically at death without becoming part of your probate estate. Likewise, it would appear that the same outcome will also apply for real property transferred by means of a Transfer on Death Deed. Now, if you receive Medi-Cal, or may need to have long-term care in the future, you should call me to discuss how best to protect your assets outside so Medi-Cal doesn’t try to recover from your estate after you pass.
That assets held in your revocable living trust will avoid both probate and Medi-Cal estate recovery simultaneously is important. Living trusts can provide more protections to your family and offer more “what if” contingency planning than is true of joint tenancy, life estate or TOD Deeds.