I am trying to help my x-wife who is a quadriplegic and in a rest home. She is competent. She owns a home and she wants to be sure Medi-Cal does not take it upon her death. The trust that she has currently is a Special Needs Trust that was funded by her lawsuit. She has purchased the home with monies from this Special Needs Trust and is fixing it up with monies from this Special Needs Trust. She wants the house to go to our three daughters upon her death or maybe earlier.
Please let me know how you would protect her assets and approximately how much it would cost.
The way to avoid recovery against the estate for Medi-Cal services is to make sure that the asset is no longer in mother's name on her passing. There are a couple of ways to go about that depending on the particulars. This is a specialty area and there is really no one-size-fits-all approach. Give me a call to discuss.
If the special needs trust will funded by your ex-wife's lawsuit, it is probably a special type of trust that will require reimbursement to Medi-Cal after her death for anything paid out on her behalf during her lifetime. The purpose of such a trust is to permit qualification for Medi-Cal benefits that would otherwise be unavailable because of the proceeds from the lawsuit. As the trust owns the house, it would be an asset subject to the reimbursement claim from the state.
You need to immediately consult with an elder law attorney in your area to examine the trust for the reimbursement language. If it is there, there is little that could be done to prevent the house from being sold after your ex-wife's death unless there are sufficient other monies in the trust to pay the state back.
Please remember to mark what you believe to be the best answer to your question. This answer is provided by estate planning attorney Robert P. Bergman, with offices in San Jose, California. Mr. Bergman is a Certified Specialist in Estate Planning, Trust and Probate Law (State Bar of California Board of Legal Specialization), and has been practicing since 1980. This answer does not create an attorney-client relationship, and is only intended to provide general legal advice within the limits of the question asked. If you wish to create an attorney-client relationship for specific legal advice, it will be necessary to enter into an engagement for legal services. More general legal information about wills, living trusts, and estate planning can be found at Mr. Bergman's main website at www.lawbob.com, or his information website at www.lawbob.net. Mr. Bergman also offers free living trust seminars and wealth preservation seminars at his offices in San Jose. For those unable to attend a live seminar, an online living trust seminar may be viewed or downloaded at www.freelivingtrustseminar.com.
First, it is important to understand that Medicaid as applied in California under the California Medi-Cal law is entirely different that Medicaid as applied by the laws of all other states, such as Pennsylvania. One of the reasons for this is that California has not complied with the Federal Medicaid law since the passage of OBRA in 1993. Therefore, you need to seek the advice of California legal counsel who specializes in this area, because Medi-Cal is a boutique area of the law, and not many people have any expertise in this area.
I concur with my friend, Bob Bergman’s answer (Hi Bob) with one exception noted below resulting from a different interpretation of facts. But Bob is correct, if this special needs trust (“SNT”) was created as a result of litigation and created by the court as part of the proceedings, the Medi-Cal system will likely have a right of recovery against whatever remains in the SNT upon your ex-wife’s passing away. There is a possibility that other versions of the SNT were created that might avoid such recovery, but most likely that is not the case. You need to have legal counsel review the documents related to the creation of the SNT to determine this.
Where I part with Bob Bergman’s response is the conclusion that the home is owned by the SNT. While that may be true, I read your facts as indicating that funds have been taken out of the SNT and used to purchase a residence which is held in the name of your ex-wife. If that is the case, ownership of the home in her name will not interfere with her Medi-Cal or SSI benefits. However, if the home is owned in her name at the time of her passing away, Medi-Cal will be able to enforce a recovery lien against the home and recover the cost of benefits paid out on her behalf (unless one of several exemptions apply, such as having an disabled child).
There are five different techniques for avoiding this consequence, each of which has its own advantages and disadvantages. This needs to be discussed with legal counsel having skill in the Medi-Cal planning area.
Hope this helps.
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Roy W. Litherland is licensed to practice law only in the State California. For questions connected with the laws of other states you should seek an Attorney in that state to advise you.
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