Roseville, CA (Law Firm Newswire) November 30, 2016 - Effective Jan. 1, 2017, claims by California Medi-Cal Estate Recovery will be decreased to the minimal amount required under federal law.
The reduction applies to those who receive Medi-Cal and who die on or after Jan. 1, 2017. The new legislation, SB 833, was signed by Governor Jerry Brown on June 27.
Under federal law, the state is required to obtain an adjustment or recovery from a person’s estate for nursing facility services if the person was permanently placed in an institution. The state also had the option to secure an adjustment or recovery from a person’s estate for other medical assistance, including home and community-based services, and relevant hospital and prescription drug services if the person was at least 55 years old at the time of receipt of the medical assistance.
Prominent Roseville, Calif. estate planning attorney David Wade states, “The new law will allow people with modest homes and assets to be able to leave bequests to their heirs without risk of having them seized upon their demise.”
Currently, Medi-Cal Estate Recovery can attempt to recover from the estate of the surviving spouse of a Medi-Cal recipient if the surviving spouse’s estate consists of assets received from the estate of the Medi-Cal recipient at the time of death. Under SB 833, Medi-Cal will be unable to recover from the surviving spouse’s estate. The surviving spouse will not be required to transfer any assets received from the estate of a deceased spouse in order to shield them from claims to recover against the surviving spouse’s estate, at the time of the surviving spouse’s death.
This represents a significant win for those who supported reform of Medi-Cal Estate Recovery. Under SB 833, Medi-Cal will only have the right to seek recovery from assets that are included in the probate estate of the deceased Medi-Cal recipient. Although probate is not required, assets included in a decedent’s estate that are valued under $150,000 are regarded part of the decedent’s probate estate for Medi-Cal Estate Recovery. This presents an opportunity for planning.
As of Jan. 1, 2017, assets that were placed into a living trust before the death of the testator are, thus, not subject to claims by Medi-Cal Estate Recovery. This also applies to assets held as joint tenancy estates as well as life estate assets. The same holds true for real property that is transferred via the new transfer on death deed.
Medi-Cal recipients may wish to explore the ways in which to prevent their assets from becoming part of their probate estate, thereby avoiding recovery of Medi-Cal against their estates.
Wade Law Offices
2400 Professional Drive
Roseville, CA 95661
Phone: (800) 835-2634
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