Legal Question in Health Care Law in California

Re: Mom's Failing Health With A living Trust

Assuming mom and the home are in CA, the best way to protect the asset is for mom to transfer a remainder interest in the home to her heirs, reserving to herself a life estate. This is the preferred method since ownership will not prevent her from obtaining MediCal to pay for long term care as long as she states on her application that she intends to return to the home to live and as long as she has the legal right to do so. Whether she returns or not is irrelevant. Her stated intention governs. After mom passes the State will have the right to lien her interest in the home for reimbursement. But, the transfer of the remainder interest means upon her death she will have no remaining interest in the home to lien. This is the preferred method because it will give the heirs the inheritance of the house free of any capital gain tax liablity. Their tax basis in the property will be the value of the property at the time of mom's death. Often many thousands in taxes will be saved by this technique. If the title is fully transfered as with a quitclaim to her heirs, her cost basis in the home will be transfered to the heirs and upon sale of the property all capital gains tax will become due.

Also, keep in mind that MediCal pays only for nursing home care, not at home care or assisted living.

These decisions should be made only with guidance from an attorney knowledgeable in this area. Many are not.