Why people with limited assets need a revocable living trust.by William J. Sweeney on 05/18/17
(Mr. Sweeney is an attorney licensed in California. The comments below are not intended as legal advice for any specific situation and may not accurately reflect the law in other jurisdictions. There may have been changes in the law since this was written. You should always consult an attorney in your own jurisdiction.)
Many people think a living trust is only needed by people who have a lot of money. In fact, a living trust may be more important to people with limited assets. If you, or your spouse have ever received Medi-Cal (Medicaid in other states) or receive it in the future, a living trust can be of significant benefit to you, even though you feel your estate is so small you don’t need one.
If you, or your spouse, have received Medi-Cal benefits during your lifetime, at some point after the death of the survivor of the two of you, Medi-Cal will be looking to your estate to recover as much of the money they advanced as they can. New laws went into effect on January 1, 2017. Although there have been a number of changes in the way Medi-Cal will attempt recovery, the one I want to address today is how they will approach your estate for repayment.
For a married couple, Medi-Cal’s policy is to only attempt recovery after the death of the surviving spouse, even if the first spouse to die was the spouse receiving Medi-Cal benefits. In the past, on the death of the surviving spouse, Medi-Cal would look to the assets the decedent owned and attempt to recover from them. For recipients who die after January 1, 2017, Medi-Cal will only attempt to recover benefits that are in your “probate estate”. In other words, if you hold your property in a revocable trust, Medi-Cal will not try to collect from the trust. They will only attempt to collect from assets that are in your name on your death.
You don't have to be married to benefit. The same rules apply to a single person.
There are also other possible ways to protect your assets from Medi-Cal on your death, including joint tenancy and beneficiary designations. While these can be effective, they should only be used after consultation with an experienced lawyer. There are potentially some problems with these which you should be aware of before you use them. The living trust gives you control of your assets during your lifetime and keeps your assets out of your probate estate upon your death.
A knowledgeable attorney can help you with this.
William J. Sweeney
Attorney at Law
915 Highland Pointe Dr., Ste. 250
Roseville, CA 95678