Daughter has questions on Medi-Cal estate claim

Dear Len & Rosie, I am writing because I have received a questionnaire from Medi-Cal regarding a trust. I am the trustee. The only asset of the trust is my mother’s home which was transferred into the trust in 2008 via a quitclaim deed. Can Medi-Cal force me to sell the home and claim the equity in the home? My mother was not on MediCal for at least the past year, maybe longer. There is a reverse mortgage on the home which I am hoping to procure funds to payoff to keep the home in the trust and to build trust assets. Please advise. — Lisa Dear Lisa, The California Department of Health Care Services (DHCS) keeps detailed records of the funds spent on every Medi-Cal recipient. The amount of this claim is limited to what Medi-Cal spent on her after she turned age 55, in addition to what Medi-Cal spent on her for long-term nursing home benefits at any age.

If your mother had died prior to 2017, her home would have been subject to the estate claim, and you would have had to pay back Medi-Cal from the proceeds of the sale of the home, after the reverse mortgage lender is paid off first. There probably wouldn’t be much left.

The good news is this. Since January 1, 2017, Medi-Cal estate claims are limited to a recipient’s estate, which means that all of your mother’s assets that avoid probate due to being in a trust, or by joint tenancy, or by beneficiary designation, are completely exempt from Medi-Cal’s claim.

So what’s left? Since she was on Medi-Cal, she had to have less than $2,000 in countable assets. If her checking account was jointly held with you, it’s exempt. If she had any retirement accounts, then those are exempt too provided she named you or others as beneficiary. Even if you’re not on the checking account, the money in that account upon probably wasn’t enough to pay for your mother’s cremation or burial, which means you still won’t have to send that money to Sacramento. Paying for costs of administration and your mother’s final expenses come before the Medi-Cal claim.

Medi-Cal won’t assert its estate claim over your mother’s personal possessions, mostly because they are untraceable. There’s no California Department of Living Room Furniture tracking the owner registration of your mother’s couch. Yet.

The one asset your mother may have owned that would likely be subject to the Medi-Cal claim is an automobile. If your mother didn’t sell or give away her vehicle before her death, and if it was titled in her name alone, then the vehicle will be subject to the estate claim. Other than that, you should be free and clear.

Keep in mind, that since there is a reverse mortgage on the home, you will have to sell the home or refinance the loan as reverse mortgages are due upon the death of the borrower.