Medi-cal Recovery

Dear Len & Rosie,

My mother passed away a year ago. She had received Medi-Cal for the last three years of her life while living in a nursing home. The state has not contacted us yet about reimbursement, but we expect they may. We have an IRA worth $10,000 and a small savings account worth another $10,000 in her name and my name.

How long does Medi-Cal have to come back to us looking for her assets? Do I have to keep the money in her accounts and wait for them, or can I disperse them to her surviving children? Or can I “hide” the money somewhere else?

Judy

Dear Judy:

We are glad that you wrote. Most people do not understand how Medi-Cal recovery works. You are obligated to notify the California Department of Health Care Services (DHCS) and provide them with a copy of her Certificate of Death within 90 days of your mother’s death at this address:

Department of Health Care Services 
Estate Recovery Unit, MS 4720 
P.O. Box 997425 
Sacramento, CA 95899-7425 

Don’t waste twenty bucks - send them a photocopy of the Certificate of Death instead of a certified copy. And don’t bother trying to hide. DHCS is very good at sending out estate claim letters even when they are not properly notified of a recipient’s death.

Almost anything your mother owned on her death is subject to the estate claim, but the IRA is not. It is very important to know that retirement accounts and any life insurance policies owned by her that pay out directly to beneficiaries are not subject to the DHCS estate claim. They are subject to the claim only if they have no beneficiaries and pay into your mother’s probate estate. Also, if your mother was survived by a minor, blind, or disabled child, there is no estate claim, even if that child doesn’t actually inherit anything. Also, there’s no claim on benefits paid on her behalf outside of a nursing home before her 55th birthday.

In this case, DHCS likely has a claim against your mother’s $10,000 savings account. They are entitled to this money but only after her funeral and burial or cremation expenses and expenses of administration are paid first.

One last thing - normally your mother couldn’t have more than $2,000 and be on Medi-Cal benefits (the IRA doesn’t count) The fact that she has $10,000 in the bank and was still on Medi-Cal is an anomaly, but it probably won’t change things.

Finally, understand that if your mother owned a home on her death, it’s more likely than not you’ll have to pay the DHCS estate claim in full. However, for those readers who are on Medi-Cal or have loved ones on Medi-Cal, it’s possible to shelter their homes from estate recovery claims by transferring property to an irrevocable trust, but only if you act now, while the recipient is still living.

Len & Rosie
 

Probate & Joint Tenancy

Dear Len & Rosie,

My grandmother died almost a year ago and willed each of her grandchildren and great grandchildren $500. My aunt and uncle were on the title of the house along with my grandmother. They were also named executors of the estate. All the grandkids are wanting their inheritance and are being told that there is no money. The house was just rented this month and will be bringing in monthly income.

Darla

Dear Darla,

Whether or not you’re ever going to see your modest inheritance depends not only on the terms of your grandmother’s will but also whether or not she actually owned anything subject to probate. Your grandmother created an estate plan, but there’s a good chance she didn’t really understand how it worked.

Your grandmother’s home, held in joint tenancy with her children, was not subject to probate and was not subject to the terms of her will. When a joint tenant dies, the surviving joint tenants own the property automatically. All your aunt and uncle had to do to clear the title was to submit your grandmother’s death certificate with an affidavit of death of joint tenant to the county recorder, together with the property tax paperwork needed to avoid a reassessment under Propositions 13 and 58.

What your grandmother did by adding your aunt and uncle to her deed was to save thousands of dollars in probate attorney fees, as well as the delays of probate. But she did this at the cost of removing her home from her estate plan. The only assets that can be used to fulfill the $500 gifts your grandmother wanted to make are assets that were titled solely in her name upon her death. Assets in a trust, joint tenancy assets, and assets with pay-on-death beneficiaries are not disposed of by your grandmother’s will.

Chances are, she didn’t have all that much besides her home. If she had more than $150,000 in her name alone, then she will have to be probated, and you would have received a notice of the petition to admit the will to probate. If she did less than $150,000 in accounts solely in her name, then these accounts could have been collected using small estate declarations under Probate Code section 13101, but these declarations should have been signed by all of the recipients of your grandmother’s will, yourself included.

If there is money out there, you could sue your aunt and uncle if you can prove that they took the estate’s money for themselves and didn’t use it all to pay off your grandmother’s debts. But it’s only $500, and if her bank accounts were also in joint tenancy there’s nothing to fight over except for the furniture. Consider this as a lesson.

Len & Rosie