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  1. #1
    Join Date
    Sep 2008
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    14

    Default How to Avoid Medicaid Liens When Leaving Somebody Real Property

    My question involves estate planning in the state of: California

    My son is the living trust on my house and I want to make sure he receives the property free and clear. I have Medicare and Medi-Cal and am aware of estate recovery.

    How can I protect my son from probate and Medicaid estate recovery?
    If I quit claim deed the house to him right now, does this protect him at all?

    He has been taking care of me for several years now. My dream is to leave him the house with no probate and as free and clear as possible.

    Best.

  2. #2
    Join Date
    Oct 2014
    Posts
    8,238

    Default Re: How to Avoid Medicaid Liens When Leaving Somebody Real Property

    Quote Quoting lawhyno
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    My question involves estate planning in the state of: California

    My son is the living trust on my house...
    Let’s start here. I assume that you mean that the title to your home is held by a living trust you created and that your son the the sole beneficiary of that trust. I’ll also guess that this trust is a revocable living trust.

    Quote Quoting lawhyno
    View Post
    How can I protect my son from probate and Medicaid estate recovery?
    If I quit claim deed the house to him right now, does this protect him at all?
    If the title to the home is held by trust, then the property in the home is already not subject to probate. But if the trust is revocable or if you retained certain powers over that trust, Medicaid may still be able to attach a lien to it if Medicaid provides funds for your care. The usual way to avoid this is to transfer the home to an irrevocable trust in which you don’t retain significant powers or give the home to your son outright before you die. The problem here is that Medicaid applies a look back period to these sorts of gifts, usually five years. Gifts made during that lookback period count as assets for you and will affect your Medicaid benefits. If you apply for benefits after the lookback period is over, then those assets are not counted and you don’t have a problem. So you have to make these kinds of transfers well before you anticipate you’ll need to apply for Medicare. Note that these kinds of transfers are generally not the best thing to do if you want to save your son the most in taxes.

    Let me note one other important thing that I emphasize to clients planning to do this sort of thing: look closely at the kind of places you can get into with only Medicaid benefits before you do it. For the most part, these places are not very good, which is not suprising given how little they get paid by Medicaid. Ask yourself if you really want to live that way. You might prefer to use your home and other assets instead to pay for the kind of care you’d like to have for as long as possible before resorting to relying on Medicaid for your care. Giving things to your kids is all well and good, but I suggest you do not short change yourself and your quality of life in your elder years to do it.

    If you still want to do it after you see what kind of care Medicaid provides then see an elder law or estate planning attorney to do it. It’s easy to screw this up if you don’t know what you’re doing.

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