You’ve all heard the stories of people losing their family homes when a person on Medi-Cal dies. They’re true. Medi-Cal can take your family’s home if an owner of the home was a Medi-Cal recipient. In fact, you are required to report the death of anyone who was a Medi-Cal recipient just so that they can decide if they are going to go after their assets or not.

When you send the notice to the Department of Healthcare Services, they will respond with a claim for repayment of all the payments they made after the Medi-Cal recipient turned 55 years old. This claim will be asserted against any assets the recipient owned when he died whether they are in a revocable living trust, a probate, an IRA or most other forms of ownership.

There are some limitations. Medi-Cal will not take the home while a spouse is still alive. In that situation, Medi-Cal will take the home when the surviving spouse dies. Now if the family is survived by a minor, blind or disabled child, Medi-Cal will not take the home at all. Finally, Medi-Cal cannot take the home if it has been properly transferred into a Medi-Cal House Trust.

With the Medi-Cal House Trust, the elder retains the right to live in the house for as long as he is able but the rest of the interest in the house is transferred to the beneficiaries of the trust (usually the children). A successful Medi-Cal House Trust ensures that the beneficiaries get a step-up in capital gains basis, that the house is not subject to estate tax, that the elder never has to move against his wishes and that Medi-Cal can make no claim against the property.

P.S. For those loyal readers who are interested, I’m delighted to announce my engagement to Bennett Braverman, another estate planning attorney.