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LIVING TRUSTS? WILL THEY PROTECT YOUR HOME AGAINST MEDI-CAL RECOVERY? |
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This is a very important question for many families. The blunt answer to this question is an emphatic NO! Living trusts have become extremely popular in recent years. Even though they are useful and a relatively simple and inexpensive way to plan your estate, they do not magically solve all your problems. Simplification of estate procedures in recent years has diminished many advantages of living trusts. But whether a living trust is best for you depends upon the size of your estate, what kinds of assets it contains and what plans you have for yourself and your family. I want to emphasize that living trusts are still an essential estate planning tool for a lot of people. Living trust packages, properly drawn, have many advantages. If you are relatively healthy, own real estate and other assets you must have one. Most living trust packages should contain health care powers of attorney and powers of attorney for management of your assets. These are essential for most of the population. However when you age and your life situation changes you might want to look at your trust to see if it protect you and your assets against the possibility of a nursing home stay. In the last few weeks, many of you had questions concerning what benefits may exist or not through the establishment of living trusts. There is some confusion about the protection that a revocable trust offers against Medi-Cal recovery. Typically many seniors that are on Medi-Cal have almost no liquid assets and a home that is exempt. However they are not aware that there is Medi-Cal reovery on their home when they pass away, since the home is exempt only as long as they are alive. Some are not aware, that presently and under Medi-Cal rules in force now, they can protect the home and transfer it out to their children legal without losing their benefit. Some have a living trust and erroneously think that the living trust will protect their property against such recovery. Again that is not true. Most living trusts protect only against probate and in some cases have some estate tax advantages. Therefore, putting your home in a living trust does not protect your home against Medi-Cal recovery. AB 2102 UPDATE On quick note about the AB2102 Assembly Bill (Bill that was going to make transfer rule extremely restrivte has been defeated. But there are plans in the pipeline and I will keep you informed of any new development. If you are on Medi-Cal or you see the possibility of nursing home and depending on your financial situation and family network, the irrevocable trust could be the answer for you. My office is still available to respond to all your questions in this all-important matter of safeguarding your assets and protecting your legacy to your children and family members.
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