I am the trustee of my uncle's trust. One of the beneficiaries is my aunt, my uncle's sister. My aunt is currently on Medi-Cal. I read that if I make a distribution to my Aunt, she will most likely lose her Medi-Cal eligibility. The amount of her inheritance is roughly $50,000.
A friend told me that she can write a trust or gift the money to somebody in order to maintain her eligibility for Medi-Cal. Is this true?
Estate Planning Attorney
Be VERY, VERY careful here. Medi-Cal has very specific requirements. I would not rely on a friend's advice unless that friend is a licensed attorney or works for Medi-Cal division. If you mean to say can she "disclaim" her share, that is one thing but if you mean have it paid to someone else to give her, that is fraud and may open up the possibility of criminal and civil sanctions. Contact your local bar association for referral to an attorney who specializes in this. Often, but not always, the attorney will do an initial consultation free of charge. You will then be in a better position to determine what to do next. Best of luck to you!
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You write that you are the trustee of your Uncle's trust but do not tell us if he is alive. If he is alive and the trust is a revocable trust, he can change it so that your Aunt's future benefit is in a special needs trust which protects her against losing her medi-cal benefit. If your uncle is dead and the trust has become irrevocable and your aunt's share has become "vested" (hers as a matter of right), the State can come after this money or take her off Medi-cal until the funds are used up for her care. Also keep in mind that there is approximately a 5-year lookback. This means the State can review her financial records going back approximately 5 years to determine if she has any assets to determine her eligibility for Medi-Cal. If you have concerns, an appropriate type of lawyer to consult is an elder care attorney. They are pro's on government benefits.
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