Medi-Cal is California’s version of Medicaid, a program that provides healthcare services for low-income individuals, including those who need long-term care. When a Medi-Cal beneficiary passes away, the state may seek to recover the costs of the care provided to them. This is known as estate recovery, and it traditionally applies to assets that are part of the decedent's probate estate.
The good news for many people using a revocable living trust in their estate planning is that assets held in the trust are generally not subject to Medi-Cal recovery. Let's explore why.
How Medi-Cal Recovery Works
Medi-Cal’s estate recovery laws allow the state to attempt to recoup the money it has spent on the beneficiary’s long-term care. Recovery can occur from the probate estate which includes property that is solely in the decedent’s name, which must pass through the probate court process to be distributed to the heirs.
Revocable Living Trusts and Medi-Cal Recovery
A revocable living trust is one of the most common tools in estate planning. It allows the person (the “grantor”) to retain full control over the assets in the trust during their lifetime. They can modify or revoke the trust at any time, which is why it's called "revocable."
Because the assets in a revocable living trust avoid the probate process, they do not enter the probate estate and are therefore not subject to Medi-Cal recovery under California law. According to California’s probate law, assets that avoid probate, such as those held in a revocable trust, cannot be targeted for recovery by the state. This includes real estate, bank accounts, and other personal property that are titled in the name of the trust.
What Does This Mean for You?
If you have received Medi-Cal benefits and are concerned about Medi-Cal recovery after your death, a revocable living trust may offer an important benefit by protecting assets from recovery, as long as those assets are properly titled in the name of the trust.
Final Thoughts
A revocable living trust is a great tool for avoiding probate and making the estate administration process easier for your loved ones. And when it comes to Medi-Cal recovery, holding assets in a revocable living trust can protect them from the state’s efforts to recover Medi-Cal expenses, as long as those assets are properly titled within the trust.
By understanding the intersection of revocable living trusts and Medi-Cal recovery, you can make informed decisions about how to protect your estate, your family, and your assets from unnecessary costs and complications in the future.
Call me for more information! (714) 619-4145