Estate Planning Questions and Answers
- How do I protect my estate from nursing home costs?
- What is the difference between a Will and a Trust?
- What is Probate?
- Why do people want to avoid Probate?
- What happens if I die without a Will?
- My parent has just passed away. Do I have to pay his/her bills?
- Should I put my house in joint tenancy with my children?
- How do I protect myself if I do not wish to be kept alive on life support machines?
- What is a Conservatorship?
- Does a Living Trust protect my estate from nursing home costs?
- What is a Special Needs Trust?
- When should I begin planning for Medi-Cal?
- If I am already receiving Medi-Cal benefits, can I still benefit from Medi-Cal planning?
- Can I make a large gift to immediately qualify for Medi-Cal?
- Can I lose my home if I receive Medi-Cal?
- If I have been a resident at a skilled nursing home for the past six months, will I be reimbursed for my past nursing home expenses?
- What is the amount Medi-Cal can claim against my estate?
- Why you may need an Elder Law attorney?
Q. How do I protect my estate from nursing home costs?
A. There are several ways to protect your estate from nursing home costs. If you plan in advance, you will have more alternatives. Advance planning includes the following: the court procedure, the use of irrevocable trusts, gifting, converting non-exempt assets into exempt assets, permissible spending down and the purchase of annuities and long term care insurance. Of course, every situation is different. If you consult our offices, we will go over your individual situation. We will also tell you the benefits and detriments (if any) of each alternative.
Q. What is the difference between a will and a trust?
A. A will takes effect after you pass away. Generally, if your estate is over $100,000 and if you have a will your estate may have to go through probate. There are many types of trusts. A living trust is the type of trust that most people have. If you have a trust and have transferred your assets to the trust, then your estate will not have to go through probate.
Q. What is probate?
A. Probate is a court process. Generally, there are several steps to the probate process. The court appoints a person to be in charge of the decedent’s estate. This person is called the personal representative. The personal representative gathers the decedent’s assets; pays the decedent’s appropriate bills; he or she may sell certain of the decedent’s assets; files tax returns; and distributes the decedent’s assets to the appropriate persons or entities. All of this is done under the court’s supervision.
Q. Why do people want to avoid probate?
A. Probate has become a bad word in our society. It can be a time consuming and costly process. Proper estate planning can avoid probate. If you do need to go through the probate process, our office can help you through every step of the process.
Q. What happens if I die without a will?
A. In California, if you die without a will, California and the Superior Court will decide who will be in charge of your estate and who will inherit your estate.
Q. My parent has just passed away. Do I have to pay his/her bills?
A. Generally, you are not responsible for your parent’s bills (unless you have assumed the responsibility by signing for them). If you become personal representative of your parent’s estate, you will be responsible to pay his/her bills but only out of his/her assets (not out of your assets).
Q. Should I put my house in joint tenancy with my children?
A. Usually, it is not a good idea to put your house in joint tenancy with your children. First, if your child is sued, his/her creditor can collect any judgment the creditor has against your child from the equity in your house. Second, if your child wants to sell the house when you pass away, your child may have to pay unnecessary capital gains taxes if you gift your house to your child while you are alive. Third, if you go into a nursing home and need to qualify for Medi-Cal, the state will have a lien on your house for any amounts paid for Medi-Cal benefits.
Q. How do I protect myself if I do not wish to be kept alive on life support machines?
A. A document called a durable power of attorney for health care will protect you from this situation.
Q. What is a conservatorship?
A. A Conservatorship is also a court process whereby the court appoints a person or entity to be in charge of your affairs if you are unable to do so. All of this is also done under the court’s supervision. A proper estate plan may avoid the need for a Conservatorship.
Q. Does a living trust protect my estate from nursing home costs?
A. No. living trusts do protect your estate from the need for a probate and a conservatorship and may in some cases save taxes. But, if your assets are in a living trust and you need to go into a nursing home, then all of the assets contained in the living trust will be counted to determine whether or not you qualify for Medi-Cal.
Q. What is a special needs trust?
A. A special needs trust shelters income and resources that might otherwise interfere with eligibility for government programs such as Social Security and Medi-Cal (Medicaid). A special needs trust can enhance quality of life over and above what the basic benefits programs can do. Simply speaking, it maximizes financial resources.
Q. When should I begin planning for Medi-Cal?
A. Immediately! Early planning provides you with more options, such as creating estate planning documents with Medi-Cal planning language making sure your appointed agent(s) can carry out further Medi-Cal planning if you eventually become incapacitated. Please realize it is never too late for Medi-Cal planning and effective strategies can still be implemented in emergency situations. However, usually the longer you wait the fewer options available.
Q. If I am already receiving Medi-Cal benefits, can I still benefit from Medi-Cal planning?
A. Yes. Medi-Cal planning is potentially able to reduce or eliminate your “share of cost” co-payment and protect your assets from Medi-Cal recovery.
Q. Can I make a large gift to immediately qualify for Medi-Cal?
A. Medi-Cal has strict regulations concerning asset transfers. Improper transfers may result in a significant “period of ineligibility” during which an individual cannot receive Medi-Cal benefits. Transfers can also have negative estate and capital gains tax ramifications. Legal advice should be obtained before making any transfers.
Q. Can I lose my home if I receive Medi-Cal?
A. Medi-Cal will try to recover its expenses from the assets the Medi-Cal beneficiary owns at the time of his or her death, including the beneficiary’s home. Your home can be protected with effective Medi-Cal planning.
Q. If I have been a resident at a skilled nursing home for the past six months, will I be reimbursed for my past nursing home expenses?
A. Medi-Cal benefits can be obtained retroactively for the three months immediately preceding your application month as long as the eligibility requirements were met for those months. As an example, if you applied in April but met the eligibility requirements in January, the nursing home would reimburse your expenses above the “share of cost” amount from January forward. If the Medi-Cal eligibility limit is increased using a “3100 Court Petition” or “Administrative Fair Hearing” procedure, the increased eligibility limit can be applied retroactively to cover the three months immediately preceding your Medi-Cal application.
Q. What is the amount Medi-Cal can claim against my estate?
A. The lesser of the total amount of benefits a Medi-Cal beneficiary received during his or her life, or the value of the Medi-Cal beneficiary’s estate at the time of their passing.
Medi-Cal recovery could wipe out a person’s estate (home value and cash) leaving the children/spouse/family little or no inheritance. You must contact an elder law attorney for proper qualification and planning in order to receive Medi-Cal benefits and protect assets (your home and cash) from recovery. Legal costs are minimal when compared to losing the equity in your home. If you are currently in a nursing home or will be entering a nursing home in the future, it is important to immediately contact an elder law attorney. Only proper legal planning sets up children/spouse/family to inherit your assets and eliminate asset loss due to recovery (lien on home or cash). An elder law attorney can prepare documents that protect your assets and have the nursing home cost paid for by the state, i.e. Medi-Cal, instead of you using your hard-earned money to pay for a nursing home.
When a Medi-Cal beneficiary dies and has no remaining estate, Medi-Cal has no assets to recover against. Properly transferring assets out of the Medi-Cal beneficiary’s name should only be done using a qualified elder law attorney. Without professional legal guidance you could incur expensive Medi-Cal transfer penalties.
A. Elder law attorneys concentrate on the unique needs of the elderly and people with disabilities. Their focus is to protect the autonomy, quality of life and financial security of seniors as they age.
People with Alzheimer’s disease and their families face special needs. The high costs associated with caring for a loved one with dementia, in addition to the emotionally and physically demanding requirements of caregiving, require highly specialized expertise. Complex estate planning, conservatorship issues and long-term health care needs all come into play.
Elder law attorneys offer unique expertise that even the most financially knowledgeable can benefit from. Many elder care attorneys are associated with geriatric case managers, nurses, or social workers. These professionals can provide guidance on such issues as medical care, senior housing, managing finances, and more. Long-term financial and medical planning is especially important for an illness like Alzheimer’s, in which people with the disease may live for ten years or longer and care can be incredibly costly.
Important concerns to address with an elder law attorney are as follows:
- Qualifying for Medi-Cal.
- Effective estate planning, using durable powers of attorney, trusts, wills and other legal tools.
- Who will make decisions in the case of incapacity?
- Planning for long-term care when a loved one can no longer be cared for at home.
Please contact us to schedule a free consultation.