Estate Planning For The Aging: Elder Care Law In California

As we age, it becomes increasingly important to implement careful estate planning. Yet discussing death and passing is rarely easy, and there are crucial elements of estate plans that are of particular importance for the elderly, and to plan for your old age before you get there and find your estate plans lacking. After all, estate plans are about more than just what happens after your death. This article discusses:

• How to help aging parents plan their estates, including for healthcare concerns while they are alive.
• California Medicaid and Medicare details that need to be taken into account when planning your estate.
• How the goals of parents and their children may not align when it comes to estate planning objectives.

How Can I Help My Aging Parents Ensure Proper Estate Planning For Their Needs?

While discussing estate plans with aging parents is never an easy situation, it is one we hope for everyone. It is also a complicated legal field, which is not always easy to understand or implement. There is even a subfield of estate planning called elder law.

The first step is to go over the estate plan with plenty of questions to make sure there are no gaps or conflicts. What does their will say? Do they have a trust, what does it say, is it funded? Who is given power of attorney? Advanced healthcare directive? All these details are important to go over to ensure everything is correct, up to date, and plans either for their death or for their incapacitation and possible care costs.

For example, do they have a Medicaid trust to help ensure their eligibility for that program? Do they have long-term care insurance? That used to be very common, but now prices have exploded, so it is expensive and not as common as before. Is their plan adapted to California’s particular laws and codes?

California has some quite distinct laws than most other states regarding Medicaid, for example. In California, the Medicaid program is called Medi-Cal.

How Can I Navigate California’s Medicaid Requirements And Eligibility As My Parents Age?

Medicaid assistance, especially for long-term care, is restricted based on income and wealth. You might not be eligible based on how much money you make or have. To avoid people simply giving or transferring away assets to become eligible, a look-back period exists to review transactions and wealth before the request for Medicaid assistance.

Most states have a six-month look-back period to become eligible for it. In California, they actually have a 30-month lookback, which is, to my knowledge, the longest lookback period in the country.

As a result, Medi-Cal is going to look back at your estate for 30 months and see what assets you transferred out of your estate. If you transferred something significant enough out of your estate during those 30 months, they will penalize you, and you will not be eligible for Medicaid until that penalty period is up.

In addition, the asset limit keeps changing. In California, what used to be a $2,000 asset limit is now closer to $130,000 per individual, and the long-term plan in California may be to have no asset limit.

California is also unique in its Medicaid/Medi-Cal recovery liens. In California, a Medicaid lien can only be filed against your probate estate. If you have a house that is your primary residence, it will be excluded when calculating your eligibility for Medi-Cal. But if Medi-Cal pays out $2 million for your care over the next 10 years, they may file a lien against your probate estate.

Thus if you still own your house personally, they can file a lien against it. When your heirs inherit it, and it is only worth $2 million, they won’t get an inheritance because the recovery lien took it all.

How Can I Protect My Assets From Medicaid For Reimbursement Or Eligibility?

Fortunately, there are certainly estate planning techniques to help deal with Medicaid difficulties. The primary one is establishing a Medicaid asset protection trust.

You can take some non-essential assets, for example, an investment home, and transfer them into an irrevocable Medicaid trust. If you do so 31 months before you apply for Medi-Cal, they will look back over 30 months and say you do not have too many assets and are therefore eligible.

If you transferred it 24 months before, though, then it will still be considered part of your estate. Although it will not be legally part of your estate anymore because it was transferred out into an irrevocable trust during the lookback period, you will still not be able to get Medicaid until that lookback period has passed.

A trust can also help you deal with Medi-Cal liens. If you have your house in a revocable living trust when you die, it is not part of your probate estate, and Medi-Cal will not be able to file a lien against it.

What Is The Best Way To Ensure My Estate Plan Is Up To Date?

Once you get past a certain age, an annual review of your estate plans becomes imperative. Once a year, maybe on the same date each year, pull out that estate plan and review the documents. Verify what they say. Who are nominated as beneficiaries, where, and for what? How will assets and property be distributed?

Separately from that, make a list of all the changes that have occurred in your life. Kids get married, kids get divorced. People who are nominated for roles in your estate plan may develop substance addictions or debts. Parents can develop dementia and may have trouble changing their plans. Then you can look at that list and compare it to the estate plan and ask yourself if the changes in your life are significant enough to be reflected in your estate plan.

At What Age Do Estate Plans Become Essential?

At 60, most people probably are not thinking about long-term care. At 70, though, they probably are. But did they plan ahead to qualify for it? Given that your Medicaid asset trust may be necessary to start getting stuff out of your state so that you can qualify for Medi-Cal after that 30-month lookback period, it is worth doing so before you think you will ever need it.

What Kinds Of Conflicts Can Emerge When Helping Aging Parents Create Or Amend Their Estate Planning Documents In California?

One thing many children forget to go over with aging parents is their goal. The majority of kids want their inheritance, and while parents often want to give it to them, they may have to deal with other realities or priorities.

Children often want the house that their parents purchased in California in the seventies for $200,000, which is now worth $2 million. But that may not align with their parent’s goals or needs. Their goal could be to get their kid that inheritance and give them a step up in life. But their goals could just as easily be their own personal care.

If it takes slowly selling off their estate to pay for their primary care, that is their decision and not their children’s to make. Obviously, if they had long-term care insurance or maybe they have some kind of VA benefits or TRICARE for which medical care is covered for the rest of their life, then that would not be an issue.

But you will certainly never know unless you go over such questions and concerns with your parents as they age. One more reason to regularly review not only your own estate plan, but also that of your aging parents. If you are unsure about your parent’s estate plan, or your own, an experienced lawyer is the best place to seek assistance. For more information on Estate Planning For Aging Parents In California, an initial consultation is your next best step.