The 3 different stages of Medi-Cal planning.

Dear Len & Rosie,

My husband has Alzheimer’s and has been in a nursing home for three years. I qualified him for Medi-Cal shortly after he was placed. I have had conflicting answers about assets I can keep when he passes away. Our monthly income is just under $2,000. My earned income is very low, and I would love to work more but am afraid I would have to give my income back to the government and get stuck in a maze bureaucratic paperwork.

Ruby

Dear Ruby,

Medi-Cal planning is divided into three different stages: Eligibility, Share of Cost, and Estate Recovery. You took care of the first step three years ago. When your husband qualified for benefits, you had ninety days to remove from his name all of his non-exempt assets (your non-retirement account investments, mostly). So right now, everything should be in your name alone, except for maybe the house. And don’t worry about acquiring new assets. You could win the lottery and your husband won’t lose Medi-Cal. Any “after-acquired assets” you get in the future won’t count against your husband’s continuing eligibility.

Your husband’s Share of Cost is the amount of money he has to pay to the nursing home each month, before Medi-Cal picks up the rest. You get to keep all the money you earn, regardless of the amount.  Also, if your monthly income is less than $3,023 a month (for 2017), you get to take as much of your husband’s income as is needed to bring you up to $3,023.  The rest of your husband's monthly income, except for a $35 “personal needs allowance”, must be paid to the nursing home as his share of cost. Feel free to get a job and earn as much as you can. You may have to give up some of your husband’s income, but you won’t lose any of yours.

The third stage, Estate Recovery, is a lot easier than it used to be. The new rules, effective January 1, 2017, are summarized as follows: 1) There’s no estate claim if the recipient is survived by a spouse, or by a minor, blind, or disabled child; and 2) Estate claims are now limited to assets that are subject to probate - that is, assets owned by the recipient on death that are outside of a trust and do not have a designated beneficiary or joint tenant.

If you die first and the home is held jointly with your husband, then it will be at risk of being subject to Medi-Cal’s estate claim. However, if you transfer the home to a trust, even an ordinary revocable trust, it will be protected for your children even if you pass before your husband. For this reason, you should meet with an attorney to make sure that everything is in order.

Len & Rosie

How to Make a Free Estate Plan

Dear Len & Rosie,

I am married, and we have a 10 month old boy. We both work, but live paycheck to paycheck. We have a mobile home, which I bought before I met my wife. If anything happens to me, the house is hers. I do not even mind putting her on title. Now that we have a child, what paperwork should we be doing? Also, what paperwork do we need to do to say what we want to happen with our son if something happens to both of us?

Richard

Dear Richard

You and your wife do not need a trust, because you do not have an estate subject to probate in the courts. An estate worth less than $150,000 can be collected using small estate affidavits under California Probate Code section 13101, and the value of your automobiles and mobile home do not count against that limit.

What you need are wills, and the cheapest way to get one is to get one for free.  If you do an internet search for “California Statutory Will” you will find direct links to a free form will be written by the California Legislature. It’s available at the State Bar webpage under consumer information at www.calbar.ca.gov.

Be careful filling out the form. You want your estate passing to your wife if she survives you and then to your children if she does not. The form also allows you to nominate guardians who will have custody of your minor children if your wife dies before you. Her will should mirror yours. The wills must be witnessed by two adults who are not inheriting from you.  Please note that in California, wills are never notarized.

In addition to wills, you and your wife should have Advance Health Care Directives and Durable Powers of Attorney so that you may make important medical and financial decisions for one another in the event one of you should become incapacitated.

You should be able to get Advance Health Care Directive forms from your medical provider, or just email us at len@lentillem.com and we’ll send one to you. AHCD’s should be witnessed by two adults, one of whom can’t be related to you or inherit from you, or you can skip the witnesses and just have it notarized. 

For your DPOA’s, there’s a California Statutory Durable General Power of Attorney form you can search for on the internet.  It’s good for most purposes and should be signed before a Notary Public.

Keep in mind the risk of doing your own estate plan. You may make mistakes without knowing that you did, and not having an attorney review your completed documents does put you at risk that your estate plan won’t work the way you want it to.

Len & Rosie