FREQUENTLY ASKED QUESTIONS ABOUT ESTATE PLANNING
Q. I AM NOT OLD OR RICH. WHY DO I NEED AN ESTATE PLAN?
The truth is, you already have an estate plan under California law. If you are over 18 and die without a Will or Trust, the laws of the State of California will decide who receives your assets. These laws are known as “intestate succession.” The laws determine who your closest relatives are and how large their shares will be. The choices made under the laws of intestate succession may directly conflict with the choices you would have made with a Will.
Q. IF I ALREADY HAVE A WILL, CAN I AVOID PROBATE?
You may be able to avoid Probate if you do not own real estate or have other assets totaling more than $150,000. “Probate” is the overall name given to the Court process whereby a court distributes the assets of a deceased person. Probate costs on average about $10,000 and takes at least 6 months. If you do own assets worth more than $150,000, you can still avoid Probate by making arrangements for the passage of the assets outside of probate (such as by beneficiary designation, through a revocable “living” trust, or by joint tenancy).
Q. WHAT ARE THE FOUR STANDARD ESTATE PLANNING DOCUMENTS?
Revocable Trust – A revocable or “living” trust helps ensure that your assets will be managed according to your wishes — even if you become unable to manage them yourself. Most people name themselves as the Trustee in charge of managing Trust assets, and then have a Successor Trustee named to take over in the event of incapacity or death.
If you lose capacity and a Successor Trustee takes over, that Successor Trustee is required to follow the instructions in the Trust and comply with the duties imposed by California law. The Successor Trustee is a “fiduciary” and is required to manage Trust assets solely for your benefit.
At death, the Successor Trustee, similar to the Executor of a Will, distributes the Trust assets according to your instructions. Unlike a Will, however, if your assets contain real estate or financial accounts with a combined total exceeding $150,000, this can all be done without a probate proceeding.
Probate can take more time to complete than the distribution of property held in a living trust, and assets tied up in probate may not be as readily accessible to the beneficiaries as those held in a living trust. The overall cost of a probate is often five to ten times greater than the cost of Trust administration following death.
Will – Even if you have a trust, you still need a Will to pick-up all assets outside the trust for distribution. This type of Will is known as a “pour-over Will,” because it pours over into the trust. The Will appoints an executor who is responsible for the “immediate need” items following your death, such as paying bills, collecting assets and distributing personal property. The Will can also contain provisions nominating a guardian for your minor children.
Durable Power of Attorney – This document is used to appoint someone to handle all of your financial affairs. It is effective while you are still alive and is most useful after you have lost capacity. The power of attorney ends upon your death. Well drafted powers of attorney contain emergency provisions that will permit your agent to reduce your asset level and create an irrevocable trust in the event that long-term care is needed.
Advance Health Care Directive – This document combines the medical power of attorney with the living will. It appoints an agent to make health care decisions for you in the event you are unable to speak with your medical providers. It also provides instructions regarding end-of-life care, including discontinuing life support when certain conditions are met. A well drafted Advance Health Care Directive will contain a “HIPAA release.” The release will permit your health care agent to speak with any medical providers, regardless of whether you have previously completed a release form under HIPAA (a Federal law that protects the privacy of medical records).
FREQUENTLY ASKED QUESTIONS ABOUT MEDI-CAL FOR LONG-TERM CARE
Q. CAN I USE MEDI-CAL TO PAY FOR ASSISTED LIVING?
No, the Medi-Cal program will only pay for care in a skilled nursing facility, (also known as a nursing home).
Although there a few “demonstration counties” around the State of California which offer Medi-Cal coverage for assisted living, no such programs exist in Nevada and Placer counties.
The only ways to obtain assistance with the cost of assisted living in our area are through: 1) long-term care insurance or 2) VA benefits for war-time veterans. The rates for 2018 are as follows: single veterans can qualify for up to $1,830 per month; married veterans can receive up to $2,169 per month; and surviving spouses can qualify for up to $1,176 per month.
Q. DO I HAVE TO GET RID OF ALL MY ASSETS TO QUALIFY FOR MEDI-CAL?
No, there are several assets that are exempt and there are protections for married couples. Assets that do not count for Medi-Cal include the family home, one vehicle of any value, pre-paid funerals, burial plots, and retirements accounts in pay-out status, (such as IRA’s and 401k’s).
As for non-exempt assets, Medi-Cal will not begin to pay nursing home bills until the assets of the applicant are spent down to the resource limits. For an individual, the resource limit is $2,000. Married couples can keep substantially more money. The numbers for 2018 are the following: the “community spouse” (the spouse not residing at the nursing home), is entitled to retain $123,600 in non-exempt assets. In addition, $2,000 can be retained by the “institutionalized spouse” (the spouse residing in the nursing home), for a total combined resource limit of $125,600 in non-exempt assets.
Q. AFTER I HAVE QUALIFIED FOR MEDI-CAL, WILL MY FAMILY HAVE TO REPAY MEDI-CAL AFTER MY DEATH?
One of the main drawbacks of Medi-Cal for long-term care has always been “Estate Recovery.” Medi-Cal, through the California Department of Health Care Services (“DHCS”), attempts to collect any amounts paid through the Medi-Cal program for long-term care in a nursing home. The amount becomes due once the Medi-Cal recipient has died or, if married, both spouses have passed away. Prior to January 1, 2017, Estate Recovery was sought against any and all assets in which the decedent had any interest at the time of death, regardless of whether the assets were held in a living trust, joint tenancy or in a pay-on-death account.
Effective January 1, 2017, a new California law has greatly restricted estate recovery. DHCS, which operates the Medi-Cal program, has now clarified some of the significant issues that have arisen in implementation of the new law.
– DHCS has accepted the definition of “probate estate” set forth in Probate Code §19000. Accordingly, estate recovery will only be sought against an estate subject to formal probate proceedings. Estates that are eligible for summary administration (value of $150,000 or less) will not be subject to estate recovery.
– Even if a probate has been opened, there will be no recovery against a home of “modest value.” This is defined as a home worth less than 50% of the average price of homes in the county in which the home is located. (According to Zillow, the median home value in Nevada County is $449,000.) This means that homes worth less than $224,500 will not be subject to Estate Recovery, even if a probate is needed.
– Regardless of value, estate recovery will not be sought against any manufactured or mobile home registered with the Department of Housing and Community Development, (“HCD”).
– Assets that are held in a manner that is designed to pass title following death without probate will be exempt from estate recovery. This includes assets held in a living trust, in joint tenancy, or accounts that have beneficiary designations, such as IRA’s and annuities.
– There will be no recovery from surviving spouses or registered domestic partners after January 1, 2017, regardless of when the spouse who was on Medi-Cal died.
– Upon request, Medi-Cal must furnish, at least once per year, an itemized statement showing the balance owing on your Medi-Cal account. The charge for this service is limited to a $5 fee.
The new law only applies to Medi-Cal recipients who died after January 1, 2017. Those who died before the new law took effect are still subject to the old rules.
Q. CAN A NURSING HOME RESERVE ONLY A LIMITED NUMBER OF “MEDI-CAL BEDS”?
No, there is no such thing as a “Medi-Cal bed.”
It is becoming increasingly common for nursing homes to tell prospective residents that they have no more “Medi-Cal beds,” even while they are saving beds for Medicare or private pay residents. This practice is wrong and violates California law.
If a nursing home is certified to accept Medi-Cal, then ALL OF THE BEDS in that nursing home qualify as “Medi-Cal beds.” If you are told by a facility that they have no more beds available for residents on Medi-Cal, ask the facility to put that statement in writing. However, whether or not you get the evidence in writing, you can still file a complaint with the California Department of Public Health. Just Google the following and it will take you to the on-line complaint form: “CDPH Complaint’
You can also file a complaint with U.S. Department of Health and Human Services, Office for Civil Rights. Just Google “HHS civil rights complaint” and the correct page will appear.
Q. CAN A NURSING HOME EVICT AN EXISTING RESIDENT AFTER A MEDI-CAL APPLICATION HAS BEEN SUBMITTED?
No, a nursing home cannot evict a resident when a Medi-Cal application has been submitted.
A nursing home is prohibited from transferring or discharging residents who have made a timely application for Medi–Cal, even if the application is still pending. In addition, nursing homes cannot move the resident to a different room because of that payment change, except that the resident may be transferred from a private room to a semi–private room.
The only legitimate reasons for discharging a nursing home resident are the following:
1) The resident’s health has improved sufficiently so the resident no longer needs the
services provided by the facility.
2) It is necessary for the resident’s welfare and the resident’s needs cannot be met in the facility.
3) The health or safety of other individuals would be endangered.
4) The resident has failed, after reasonable and appropriate notice, to pay.
5) The facility ceases to operate.
When a discharge is made for one of the above reasons, federal and state regulations require a nursing home to provide sufficient preparation and orientation to residents to ensure a safe and orderly transfer or discharge from the facility. A written discharge summary and a formal post-discharge plan of care must be developed with the participation of the resident and family that will assist the resident in the transition to his or her new environment.
The nursing home must have adequate documentation in the resident’s records to substantiate a transfer or discharge. Before transferring or discharging a resident, the facility must provide written notice to the resident, and if known, to a family member or legal representative.
VETERANS’ AID AND ATTENDANCE BENEFITS
For those who served honorably during our nation’s wars, and their surviving spouses, there are benefits offered by the Veterans’ Administration. One such benefit is a Non-Service Connected Pension with Aid and Attendance (simply referred to as “Aid & Attendance”) that allows qualified veterans, and their surviving spouses, to receive monetary benefits to help meet the costs of in-home care or assisted living.
Q. HOW MUCH WILL AID & ATTENDANCE PAY?
For 2018, a married Veteran can qualify for up to $2,169.00 per month, a single veteran can qualify for $1,830 per month, and a surviving spouse is eligible for up to $1,176.00 per month. There are small increases each year for cost of living.
Provided some stringent requirements are met, Aid & Attendance can help pay for in-home care, independent living, assisted living, and nursing home care, (although Medi-Cal is usually the best alternative for paying nursing home bills).
Q. WHAT ARE THE QUALIFICATIONS FOR AID & ATTENDANCE?
Here’s a general summary of the most important qualifications:
1) Veterans must have served at least one day during a period of war, but are allowed to have served anywhere, even stateside. Veterans must have no less then 90-days on active duty and received an honorable discharge (or, more specifically, something other than a “dishonorable” discharge).
The following are the designated wartime periods:
World War II — December 7, 1941 through December 31, 1946
Korean Conflict — June 27, 1950 through January 31, 1955
Vietnam Era — August 5, 1964 through May 7, 1975, unless the veteran served “in country” before August 5, 1964, then the beginning time period is February 28, 1961
2) Surviving spouses must have been married to the veteran when the veteran died and not remarried.
3) The veteran, married couple, or surviving spouse, must be exceeding all of his/her/their income in paying for unreimbursed medical expenses.
4) The costs of independent living and assisted living will only count as “unreimbursed medical expenses,” when a doctor’s order stating that the veteran (or surviving spouse) needs the aid and attendance of another person to remain at that particular facility and needs daily assistance with at least 2 “activities of daily living” (ADL’s). The ADL’s are the following: eating, dressing, bathing, getting out of bed or chair (“transferring”), walking and using the toilet.
5) The veteran, married couple, or surviving spouse must have less than $80,000 in countable assets. However, the VA can set the amount wherever the claims officer determines is appropriate below the $80,000 figure. It will be based on the amount of unreimbursed medical expenses, life expectancy and the amount of assets deemed required by VA.
6) The home and one vehicle are not counted. However, unlike Medi-Cal qualification, IRA’s and similar retirement accounts are counted as assets, even if they are in pay-out status. Any amounts distributed from retirement accounts are counted as income.
The above are just the basic rules and there are several variations. It is suggested that anyone seeking such benefits obtain competent advice from an accredited agent, veteran’s service officer, or accredited attorney prior to submitting an application for VA Aid & Attendance benefits.