Will I Lose My Home?

Many people who apply for medical assistance benefits to pay for nursing home care ask this question. For many, the home constitutes much or most of their life savings. Often, it’s the only asset that a person has to pass on to his or her children.

Under the Medi-Cal regulations, the home is an exempt asset. This means that it is not taken into account when calculating eligibility for Medi-Cal. It is, however, exposed to the estate recovery process, unless it is held as joint tenants or placed in a living trust to avoid the probate court process.

Estate recovery does not take place until the recipient of the benefits dies. Then, federal law requires that states attempt to recover the benefits paid from assets the recipient owned in his or her name alone or jointly with another. If the recipient was married, the state will not seek recovery until the death of the other spouse.

The majority of California’s nursing home residents have their costs paid, in part, by Medi-Cal. Obviously, the estate recovery law affects many families.

A Living Trust Will Protect Your Home From Medi-Cal Recovery

Since Medi-Cal rules are constantly changing, you will need assistance from someone knowledgeable about these rules. Under current law, the home cannot be recovered against, unless it is subject to the probate court. Although under Medi-Cal law, the home can be transferred without penalty to anyone, the best way to avoid the probate process and insure a stepped-up income tax basis upon the death of the Medi-Cal recipient is to have a living trust.


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