Case Examples

Pre-Need Transfers to Children

Jason suffered from Parkinson’s disease and knew that he would one day require long-term care. His son Michael, a CPA, told his father that he could easily meet Medi-Cal’s eligibility requirements. Michael also knew that the state often went after the homes of Medi-Cal beneficiaries after they died in order to reimburse Medi-Cal. So he warned his father about the estate claim that the state would make against his house when he died. Knowing that he was eligible for Medi-Cal, Jason decided that he would count on becoming a Medi-Cal beneficiary in the future so that he didn't have to worry about paying for long-term care on his own. But he did not want the state to take his house when he died. So he transferred the house into Michael’s name and planned on continuing to live there until the time came to enter a nursing home. Jason’s plan went awry when his son got into an automobile accident. The accident turned out to be Michael’s fault and Michael’s car insurance only paid a small percentage of the damages and medical bills that he owed to the passenger whose car he hit. The passenger of the car he hit sued Michael, won a large judgment, and put an execution lien on Michael’s father’s house to pay the damages that Michael had caused the passenger. As a result, Jason lost his house and had to find a new place to live.

Jason would still be living at home had he consulted an elder law attorney before transferring his home into Michael’s name. An elder law attorney would have advised Jason to postpone the transfer of his home in order to avoid the very situation that Jason is currently facing. Instead of transferring his home now, an elder law attorney would have suggested that Jason create a durable power of attorney with gifting powers, that would allow Michael to transfer the house into his name in the event that Jason became a Medi-Cal beneficiary. This would have saved Jason from losing his home before becoming a Medi-Cal beneficiary and would have allowed him to avoid an estate claim upon his death.

For more information on durable powers of attorney and estate claims, click here.