What Are Medi-Cal Asset Protection Trusts?

Medi-Cal imposes strict rules on how much money and assets an applicant can have. To qualify for Medi-Cal, you must fall under the asset limit, which is $2,000 in most states.

Even with greater than $2,000 in assets, however, you may be able to get on Medi-Cal by establishing a Medi-Cal Asset Protection Trust (MAPT). When you put your assets in a MAPT, Medi-Cal will not count the money in the trust toward its resource limit.

Using Medi-Cal Asset Protection Trusts to Transfer Assets

After you create a Medi-Cal Asset Protection Trust, you no longer own the assets within it, allowing you to qualify for Medi-Cal following the five-year lookback period. People who are currently healthy but plan to go on Medi-Cal in the future might choose to use this Medi-Cal planning strategy.

It is essential to understand that MAPTs are irrevocable: Once you make the trust, you cannot change your mind and take those assets back. Your trust must be irrevocable for you to qualify for Medi-Cal because it means that you no longer own or control these assets.

In contrast to MAPTs, many types of revocable trusts, such as family trusts, are often ineffective in preparing for Medi-Cal. Having the power to revoke your trust would allow to retain control over your assets, and Medi-Cal would count the contents of your trust as part of your resources.

Creating a Medi-Cal Asset Protection Trust

Three parties are involved in a MAPT: the grantor, the trustee, and the beneficiary. When you make a trust, you become the grantor, the person who places assets into the trust. The trustee manages the trust, and the beneficiary — or beneficiaries — will receive your assets.

If you want your MAPT to ensure you qualify for Medi-Cal, you must name someone other than yourself or your spouse as the beneficiary. Designating yourself as the beneficiary would mean giving yourself assets, which Medi-Cal would count toward its asset limit.

You can, however, select your children or parents as beneficiaries. Using a MAPT, you can also make sure they get those assets when you pass away.

What Can You Place in a Medi-Cal Asset Protection Trust?

As part of your Medi-Cal planning strategy, you can place many types of assets in a MAPT, including:

• Checking and savings accounts

• Stocks and bonds

• Mutual funds

• Certificates of deposit

• Real estate that is not your primary residence

• In most states, your home

Although many states allow you to place your home in MAPT so that it will not count toward Medi-Cal’s resource limit after five years, Medi-Cal regulations vary by state. In Michigan, for example, placing your home in a MAPT will not prevent it from counting toward the asset limit.

Benefits and Drawbacks of Medi-Cal Asset Protection Trusts

Medi-Cal Asset Protection Trusts offer several benefits to individuals planning to apply for Medi-Cal:

• MAPTs preserve generational wealth, safeguarding assets for family members.

• After you pass away, the state cannot take your assets from your beneficiaries to reimburse them for your long-term care, as MAPTs avoid probate.

• Since nursing home fees can be exorbitant, MAPTs can save your family money, as they let you qualify for Medi-Cal once the lookback period has ended.

The drawbacks of MAPTs include the following:

• Once you establish a MAPT, you forfeit the control and use of your assets. If you need money, you will not be able to draw from the trust.

• The fees associated with preparing a MAPT can be costly, ranging from $2,000 to $12,000.

Speak with your attorney to learn about how using a Medi-Cal Asset Protection Trust could help you plan for your future.

ElderCounsel, the creator of Medi-Cal Asset Protection Trusts (MAPTs), offers them on its website.

Contact us

Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

Majority of Adult Children Cannot Support Boomer Parents, Surveys Find

A recent survey by the American Advisors Group (AAG) finds that 55 percent of adult children say they are not financially prepared to help their Baby Boomer parents cope with rising inflation and living expenses.

“Americans want to see their parents age with grace and dignity and have the resources they need to live comfortably, but for many families the current economy is making that difficult,” AAG Chief of Marketing Martin Lenoir said in a news release.

AAG surveyed more than 1,500 adult children, ages 40 to 55, across the country. Known as the “sandwich generation,” this group faces the responsibilities not only of raising their children, but also of serving as caregivers for their aging parents.

Among the survey’s other key findings:

• More than a third of adult children say they worry that their parents will become a financial burden for them.

• Nearly 60 percent say they cannot afford any kind of professional elder care for their parents.

• Yet almost half admit they have never broached the subject of finances with their senior parents.

• A full 50 percent of them do not know how much debt their parents are carrying.

1 in 3 Adult Children Already Assisting Their Parents Financially

Another survey, conducted in 2020 by GoHealth, Inc., explored GenXers’ and millennials’ involvement in their parents’ financial and health care needs. It found that one in three GenXers and millennials are supporting their parents financially. Nearly the same number are managing, or helping to manage, their parents’ health care.

The survey’s 2,000 GenX and millennial respondents also reported the following:

• On average, they spend 11.5 hours per week managing their parents’ health care by providing transportation, scheduling doctor visits, and explaining insurance claims. They also estimate they’ll spend 14 to 16 years continuing to do so.

• 2 in 5 spent more than $10,000 of their own money supporting their parents in 2020.

• The vast majority (86 percent of GenXers and 82 percent of millennials) worry about having enough money to support themselves and their parents.

Squeezing the Sandwich Generation

Adult children will continue to feel the pressure for the foreseeable future. Every day, on average, 10,000 Boomers (those born between 1946 and 1964) reach age 65, and another 10,000 of them turn 75. According to research by the Blackstone Group, an independent research firm, nearly 80 percent of middle-income Boomers do not have any savings designated to cover their retirement care.

Meanwhile, 30 million Boomers retired from the workforce amid the COVID-19 pandemic. Saddled with college debt, as well as rising inflation and housing costs, those GenXers and millennials who still depend on their parents for financial assistance or housing may no longer be able to count on that support.

Have ‘The Talk’

It’s important for families to have an honest and respectful financial conversation before a medical event occurs or the need for care arises. Talking about money with aging parents can be a delicate matter, but it’s necessary to understand both the degree of care that may be needed and the financial resources available to provide it.

For help planning for the future of your Boomer parents, or for your GenXer and millennial children, consult your attorney.

Contact us

Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

No Will? You're Putting Your Kids at Risk

Many people delay the conversation or thoughts of having to prepare a will. Confronting the possibility of one’s death is not easy. However, as the recent death of Anne Heche shows us, not having a will can place a significant burden on your children and cause undesirable complications. Even if difficult, planning ahead may be a better solution than the alternative.

What Happened With Actress Anne Heche?

Anne Heche’s case is a good example of why a person may want to consider creating a will sooner rather than later. Heche was divorced with two children from different relationships when she passed away. Her eldest son is 20 years old, but her younger son is still a minor.

Although they are assumed to be her sole heirs, only her oldest son is of age to administer her estate. He has filed a petition for a guardian ad litem to be put in place to protect his younger brother’s interests. The guardian ad litem may be a financial burden to Heche’s estate, and the costs of securing this professional will potentially reduce the assets available to her sons.

Even though her eldest son is dealing with his mother’s estate, this is undoubtedly very difficult for a person to go through at such a young age. Heche’s eldest son likely will not be able to do this all on his own and will need the services of a probate attorney — likely further increasing the costs of administering her estate and depleting how much is left for her children.

It has also been reported that an inventory and appraisal of her estate is needed to determine its worth and what assets she had. This process requires further professional involvement and fees that her estate must pay. In addition, it is possible that the father of her youngest son may seek to intervene in the estate’s administration to ensure he is treated fairly. Litigation costs could rack up quickly if there is any disagreement related to this.

Preparing a will and other estate planning documents can make legal proceedings significantly less complex and expensive and keep your situation as private as possible. It can also make it easier for your loved ones to know exactly what you want to happen to your assets and possessions.

Who Inherits When You Die Without a Will?

Many people do not realize that if you pass away without a will, your local state laws on intestacy will determine who qualifies as your heirs and inherits your property.

For example, in many states, if a person passes away unmarried but with children, the children will inherit everything. But what if the person had a long-term partner or was engaged to be married? They may have wanted their significant other to inherit some of their assets, but a “default” state law may lead to a different result. Or, what if you have no living children, siblings, parents, or spouse? Your property may go to the government instead of friends, grandchildren, nieces, or nephews. Having a will prevents these scenarios from happening.

Choose a Guardian for Your Children

Another benefit parents should consider is their ability to choose a guardian for their children in advance.

This matters, for example, when the other parent is not living or cannot be located. If a person does not set forth their wishes ahead of time, multiple parties may step up after a person’s death and argue over who should care for any minor children.

A court may be tasked with making this decision, and it may not be what you would have wanted. This can be expensive, traumatic for all involved, and a long process. Courts will generally try to appoint the individual a person has selected if your wishes are in a will or other planning document.

The Bottom Line

The bottom line is that having estate planning documents in place makes your wishes more likely to be honored and less likely that a court will decide what happens. This is also true where you may be incapacitated and unable to voice your wishes. While Anne Heche’s situation is not unusual, it is avoidable.

For information on preparing a will or other estate planning documents, contact your attorney. 

Photo credit: Mingle Media TV

Contact us

Elise Lampert, Esq.

Law Office of Elise Lampert 

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com