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Elderlaw: 09/15/2015

Elderlaw Advocates

Dear Len & Rosie,

My husband of 30 years recently passed away without a will. Our home is in joint tenancy, so I know that an affidavit of death of joint tenant should be recorded with the County Recorder. Our cars were titled in both our names, and all our bank accounts were also joint tenancies. Other than a small IRA, of which I am listed as the beneficiary, everything was in both of our names. As I see it, all of our assets now will pass to me and there is simply no estate to probate. Or am I over-simplifying things?


Dear Susan,

Everything you wrote is pretty much correct, but you are only half way there. You should obtain date-of-death values for any non-IRA securities you own, and you may want to have your home appraised, to establish the new cost basis for your assets. But what’s going to happen when you die? If your husband died without a will, you probably don’t have an estate plan of your own. Get one.

If you die without a will, your children, if you have any, will inherit your estate in equal shares by intestate succession. But what if they die before you? Your estate could fall into the hands of minor or spendthrift grandchildren who may not be responsible enough to manage an inheritance. Even worse, if a disabled child or grandchild inherits from you, he or she may lose eligibility for Social Security and Medi-Cal benefits unless the inheritance is held within a Special Needs Trust.

At the very least you should have a will that spells out how your estate is to be divided, a durable general power of attorney for financial decisions, and an advance health care directive so the loved ones you pick can make important medical decisions on your behalf if you become incapacitated.

But what you really ought to do is to create a revocable trust to avoid probate. If your estate is worth $600,000 upon your death, then a happy lawyer will earn $15,000 in statutory probate lawyer fees. If you are worth $1,000,000, an even happier lawyer will earn a base fee of $23,000, for exactly the same amount of work. If your home is held within a trust upon your death, it won’t be subject to probate, and the legal and administrative expenses of distributing your assets to your children will be much less.

Now you may be thinking, why not avoid probate by putting my home into joint tenancy with my children? Don’t do this. Your children may not give it back if you ask for it, and your home would become subject to the claims of their creditors. A revocable trust will allow your assets to avoid probate on your death while keeping you in charge for as long as you want.

Finally, don’t forget your IRA. You should roll over your husband’s IRA to one of your own. Just don’t forget to name your children as your IRA beneficiaries. If you forget and your IRA pays into your estate when you pass, then the IRA must be cashed in within five years of your death and your children will lose the opportunity to stretch out IRA distributions over their own lifetimes.

Len & Rosie

Dear Len & Rosie,

My wife and I and my recently deceased mother held title to a house in joint tenancy that all three of us bought together about seven years ago. My mother was on Medi-Cal for five years. Does Medi-Cal have a legal claim against this property? I was under the impression that joint tenancy property was immune from their claim, but Medi-Cal’s claim form seems to indicate otherwise.


Dear Richard,

You and your wife will probably have to break out your checkbook. Joint tenancy property was once exempt from Medi-Cal estate claims, but that hasn’t been the law since October 1993. Prior to then, state Medicaid agencies could assert estate recovery claim against estates probated in the courts. Any asset that avoided probate, such as a home held in joint tenancy or within a revocable trust, was once exempt from Medi-Cal estate recovery.

That changed in October, 1993, when Congress enacted the Omnibus Budget Reconciliation Act, or “OBRA ’93.” This law made significant changes in the way Medi-Cal estate recovery claims work. Under the federal government’s definition of the “expanded estate”, Medi-Cal is legally required to assert an estate claim against any assets owned by a Medi-Cal recipient upon his or her death. Since your mother owned one-third of your home when she died, that third is subject to Medi-Cal’s estate claim. The two-thirds you and your wife own together is protected from the estate claim.

There are exceptions to Medi-Cal recovery claims. If your mother was survived by a spouse, the claim would be deferred until after her husband’s death. If she was survived by a blind, disabled, or minor child, Medi-Cal has no claim at all. There is also a means of asserting a hardship waiver, but these waivers are difficult to come by and are most frequently granted only when you can show that care you provided to your mother at home kept her out of a nursing home, saving the state money. Unfortunately for you, it’s more than likely that you and your wife will have to pay off Medi-Cal’s claim.

It is too late for you and your wife, but any living person who is a recipient of Medi-Cal benefits can act now to protect his or her home and other exempt assets from Medi-Cal estate claims. One way of doing so is simply to give the property away to the children. However, this is usually a bad idea because an outright gift would result in a loss of the step-up in cost basis that happens when property is inherited. When the children sell the home, they’ll have to pay a great deal of capital gains tax that they would avoid if they were to inherit the property instead of receiving it as a gift.

Fortunately, it’s possible for a Medi-Cal recipient to shelter his or her home while preserving the step-up in cost basis by transferring the home into an irrevocable trust. These trusts are very different from most irrevocable trusts found in estate planning, and should be prepared only by an attorney experienced in Medi-Cal planning.

Len & Rosie

Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at 996-4505, or on the Internet at

Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at (707) 996-4505, or on the Internet at Len also answers legal questions each weekday, Noon-1 p.m. and Sundays, 4-7 p.m. on KGO Radio 810 AM.

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