Medical Trust Planning

On Behalf of | May 5, 2020 | estate planning


As you get started with estate planning, you should take the time to learn more about the different forms of estate plans so that you can get a better idea of how to structure your estate plans to best suit your needs. One thing to consider while estate planning is medical trust planning.

If you have questions about medical trust planning, contact the California estate planning attorneys at Galanti and Copenhaver, Inc. Our attorneys can help you with all kinds of estate-related issues–whether you are just getting started with your estate plans, or you want to make some changes. Give our office a call today to schedule a consultation to meet with one of our attorneys.

What Is Medical Trust Planning?

One of the things you may want to plan for in the future is medical bills and related costs. Nursing homes and assisted living facilities are some of the biggest expenses you may face as you age. Through the use of a medical trust, you may be able to avoid some of the financial issues that may occur down the line if you require significant medical care.

Medi-Cal and How the Program May Impact Estate Planning

Medi-Cal is California’s government health insurance program. People who have significant financial need may be eligible for Medi-Cal. To be eligible for Medi-Cal, a person’s assets must be under a certain threshold. While most of the senior population will be eligible for Medicare, Medicare does not pay for assisted living care. For this reason, qualifying for Medi-Cal is often in an older person’s best interests.

Since Medi-Cal is a needs-based program, you may need to divest your assets in order to qualify. You can do this by setting up an irrevocable trust. The assets you place in an irrevocable trust are no longer legally in your name–these assets now belong to the trust.

As of 2017, you can also use a revocable living trust for estate planning, since the law changed to allow Medi-Cal to only have the ability to pursue assets that are available in the deceased person’s probate estate.

What is a Medi-Cal Asset Protection Trust?

It is possible to protect your estate by creating a Medi-Cal Asset Protection Trust. The state of California has the right to recover the expenses the state paid for a deceased individual’s medical care from that person’s assets which are in their name at the time of their death. Since medical care can be costly, the recovery of these funds can take up a large portion of the deceased individual’s assets–or may even mean that the assets are entirely depleted. 

However, under the new law that went into effect on January 1, 2017, assets held in a living (revocable) trust are now immune to recovery by Medi-Cal. The law limits Medi-Cal’s ability to seek reimbursement for the expenses it paid to only the assets that pass through as part of the deceased individual’s probate estate. This effectively excludes assets held in trusts from being subject to being taken for reimbursement by Medi-Cal.

How to Use a Medi-Cal Asset Protection Trust to Protect Your Estate

It is important to consider setting up either an irrevocable trust or a revocable living trust so that you can have your family home and other assets transferred into the trust in order to protect these assets from being taken by the state. This practice is perfectly legal, and your estate planning attorney can help you achieve your goals to protect your assets.

Medi-Cal asset protection trusts can be set up to legally transfer assets that may otherwise cause a person to be disqualified from receiving benefits. The trusts can also protect assets from being taken to cover expenses that were previously paid through Medi-Cal.

It is important to carefully consider the pros and cons of setting up each type of trust. With an irrevocable trust, you take assets out of your name and place them into the trust where they legally become the property of the trust. These trusts cannot be modified except under limited circumstances. 

Revocable living trusts can also be used as an estate planning tool to help you protect your assets from being taken by Medi-Cal for reimbursement of expenses it paid out for medical costs. While revocable trusts can be used for this purpose and have the option to be modified as needed down the road, the assets in the revocable trust remain in your name which can affect your current eligibility for the Medi-Cal program.

It is important to hire an experienced estate planning attorney who can help you make decisions regarding your estate plans, taking into consideration your individual needs. Contact us today at (707) 867-0787 or fill out our online contact form to see how we can help you.