Sheltering Your Home from Potential Medi-Cal Estate Claims


Dear Len & Rosie,

I am 68 and I am married for the second time. My house, where my husband and I live, is still in my name, and there are no mortgages on it. My trust is written such that, after my death, my husband will have the right to live in my home until he dies, after which it will be divided amongst my three children. I would like to put the property in my children’s names now, so that if I should enter a nursing home, the government can’t take the home as payment. But I also want to keep control over the property as long as I can. What should I do?


Dear Lorena,

You don’t have to do anything with your home to qualify for Medi-Cal. You are allowed to own your home and still receive Medi-Cal nursing home benefits. There is also no Medi-Cal estate claim for any benefits paid on you or your husband’s behalf until both of you have died. Sheltering your home is really for the benefit of your children, not you.

You could give the house to your children now, while retaining a life estate in your home for yourself and your husband, to last until the survivor between you dies. This means that you and your husband will be able to live in the house for as long as you both live. After you both die, your children will own the property.

But you will lose some of your control over the property. You would not be able to sell it or encumber it with a mortgage without the consent of your children and your husband. More importantly, if your children fail to pay their taxes or get sued, their creditors can record a judgment lien against your home. If one of your children dies before you, then his or her share of the home will pass to his or her heirs through probate. 

The best way to protect a home from potential Medi-Cal estate claims is to shelter it within an irrevocable trust, which will allow you greater flexibility in deciding how the trust will be distributed upon your death. But if you create an irrevocable trust for your home, you won’t be in charge any longer, because you cannot be the trustee. Also, your rights with respect to the trust would be severely limited, because otherwise your home would be subject to a Medi-Cal claim. You wouldn’t have much more than a right to reside in your own home.

It is important to understand that giving your home away, either outright to your children, or within an irrevocable trust is usually a bad idea if you are not already on Medi-Cal benefits or suffer from an ailment that is very likely to put you into a nursing home. Don’t do this just because you fear that you may need long term care some day. If you are healthy today but concerned about future medical costs, you could amend your trust and sign a new durable power of attorney and give permission to your children today to do this sort of planning for you in the future if you ever become incapacitated.

Len & Rosie