Estate & Medi-Cal Planning

Estate Planning

Many people believe that estate planning is only for people who are particularly wealthy, have elaborate plans in mind for passing their money to their heirs, or for people who are acutely ill and contemplating their death. This could not be farther from the truth!

Estate planning is for every husband, wife, mother, father, grandparent, business owner, professional, or anyone else who has someone they care about, are concerned about providing responsibly for their own well being and for the well being of those they love, and for anyone who seeks to make a difference in the lives of others after they're gone. Estate planning is not 'death planning'; it's 'life planning', and an essential and rewarding process for individuals and families who engage in it.

When done properly, estate planning requires that a highly trained individual lead you through one or more in-depth meetings to uncover your hopes, fears, and expectations for yourself and for those who are most important to you. This process almost always requires the preparation of several sophisticated legal documents, but those documents themselves are not 'estate planning.' Planning is a process, represented by a complete strategy that is properly documented and maintained by a professional who has taken the time to get to know you, and who is committed to continuing to serve you.

Medi-Cal Planning

One currently-effective planning technique is to transfer assets into a 'Medicaid' trust. In a Medicaid trust, the trust maker retains the right to all of the trust income for life while irrevocably giving up the right to receive or benefit from any of the trust principal. The assets in the trust are not available to pay for the cost of the trust maker's LTC.

By using a Medi-Cal trust, a senior can preserve capital and still qualify for Medi-Cal, but only after expiration of the look-back period for the transfer to the trust (which can be as much as 60 months (5 years)).
The 'penalty period' starts from the date the applicant applies for Medi-Cal and would be eligible but for the disqualifying transfer. Its length is determined by dividing the state's average daily private pay nursing home cost into the total of the transfers made during the look-back period.
For the Medi-Cal trust strategy to work, insurance, an income stream, or other assets must be sufficient to pay for LTC if needed during the waiting period before applying for Medicaid.
A Medi-Cal trust can allow the trustee to distribute principal during the trust maker's lifetime for the benefit of the trust maker's spouse, children, or other designated beneficiaries, just not to or for the benefit of the trust maker. Many trust makers choose to maintain the right (called a Special Power of Appointment) to change the current or ultimate beneficiaries of the Medi-Cal trust by 'reappointing' the assets to different family members at a later date.