Preserving Intergenerational Wealth and Avoiding Medi-Cal Recovery
I think about intergenerational wealth because of my line of work. When I’ve spoken with other Nisei/Sansei Japanese American estate-planning attorneys, they’ve shared my observation that the Nisei generation is a group of people with fairly modest means.
The Niseis have been very hard-working, thrifty people, but I think, compared to similarly situated ethnic groups, they are not extremely wealthy.
That’s no surprise. After the war forced the Isseis to sell homes, farms and personal property for paltry amounts, of course future generations will feel the loss. My father’s family was forced to sell a nursery in the Torrance area for an extremely reduced price.
This personal family history has made me feel very strongly about the injustice of a program called Medi-Cal “recovery.” An ill person can own a home and still receive Medi-Cal benefits for health or for long-term care needs. However, after both the patient and his or her spouse pass away, unless an exception applies (like having a child under 21, having an aged, blind or disabled child, being able to prove an exceptional caretaker situation, or having a very strong hardship claim), the Medi-Cal recovery program will ask for the money back for health services used after the patient turned 55 years old or for long-term care services for patients of all ages.
If the money cannot be repaid, there is 7 percent interest on the debt.
California Advocates for Nursing Home Reform (CANHR) has written a very useful booklet about Medi-Cal recovery, available at www.canhr.org/publications/PDFs/Medi-Cal_Recovery.pdf.
I’ve heard from several families that have lost their family home due to Medi-Cal recovery. It’s a devastating loss because for many families, the home is the main source of wealth.
What really offends me about this program is that it affects low-income, minority people harder than other people. After speaking with hundreds of people about Medi-Cal issues, CANHR has come to this conclusion. There are not very many minority lawyers doing estate planning/ asset preservation work and it is difficult for lower-income people to afford a lawyer to avoid Medi-Cal recovery. As a result, lower income, minority families are disproportionately affected by Medi-Cal recovery.
Attorneys on the lawyer referral panel at CANHR, which include me, draft proactive estate planning documents that help avoid future Medi-Cal recovery problems. Go to www.calestateplanning.com/estate.htm and see “Medi-Cal Trusts.” Consider revising your documents to address Medi-Cal recovery concerns.
My office helps people plan for the possibility of Medi-Cal recovery. Contact my office (800) 417-5250 or [email protected] or California Advocates for Nursing Home Reform at (800) 474-1116 for more information.
There is currently a bill before the California Assembly Appropriations Committee, SB 1124, that would ameliorate a couple of aspects of recovery. (www.canhr.org/legislation/leg_updateSB1124.html) SB1124 eliminates recovery for Medi-Cal used for “health” purposes, but would leave in place Medi-Cal recovery for long-term care Medi-Cal. It would also eliminate recovery from the estate of the first spouse to die once the second spouse passes away.
If your family was affected by Medi-Cal recovery, please consider submitting a story to CANHR at www.canhr.org/form/tell_us_your_story/story_submission_form.html.
Please consider writing a letter in support of the legislation to the Assembly Appropriations Committee at www.canhr.org/legislation/2014/PDF/Sample%20Letter%20SB%201124_individual.1.pdf.
SB 1124 is an important bill, worthy of your support!
The information in this article is intended to be used as general information only. Nothing in this article constitutes specific legal advice. Laurie Shigekuni has practiced estate planning, probate and trust administration law since 1996. She graduated from UC Santa Cruz in 1983 and UC Hastings College of the Law in 1989. Laurie Shigekuni & Associates has offices in Pasadena and San Francisco. Additional information can be found at www.calestateplanning.com. Opinions expressed are not necessarily those of The Rafu Shimpo.