Currently, to qualify for Medi-cal benefits, a single person can’t have more than $2,000 in “countable” or “non-exempt” assets, and a married person whose spouse will still live at home can’t have more than $109,560 in countable assets.  Countable or non-exempt assets are generally assets that can easily be turned into cash.  Examples of countable assets include second homes, bank accounts, stocks and bonds, and assets held in your living trust.  Medi-cal rules also establish “exempt” assets that won’t be counted when deciding whether you or a loved one qualifies for benefits.  For instance, the equity in your principle home will be exempt up to $750,000 if you are single and intend to return home.  Whereas, if you’re married or have a child who is blind, disabled, or under 21 and lives in the home, then there won’t be a limit on the amount of equity exempt.  More examples of exempt property include your personal belongings, household items, certain life insurance, and one car.  Your income isn’t counted in determining if you qualify, but it can affect whether you’ll have to pay a share of the nursing home and medical costs.   You can plan to meet Medi-cal eligibility through many different methods, such as by converting countable assets to exempt assets (e.g. by paying down your mortgage or buying a new replacement car), transferring assets to your spouse or family members, or filing a petition to increase the eligibility limit so you can keep extra assets.  But no matter the strategy, the law must be carefully abided by and potential disadvantages have to be evaluated in light of your goals and circumstances.  Certain actions can bring negative tax consequences that will outweigh the possible benefits, or can lead to penalties and lengthy periods of ineligibility.

If benefits are received, then Medi-cal will attempt to collect the payments back through an “estate claim” when the beneficiary passes away by looking to the assets belonging to that person at the time of his or her death.  This includes assets that were previously exempt for eligibility purposes, but there are some exceptions.  For example if the beneficiary’s spouse was living in a home owned by the beneficiary, Medi-cal will not collect until the spouse still living in the home has also died.  Some assets can be legally transferred away during the beneficiary’s lifetime and won’t be subject to collection, but this should only be done when eligibility won’t be jeopardized.  Also note that when it comes to Medi-cal, the rules and regulations are constantly changing, creating additional planning challenges.  Just last year, in September 2008, major changes were introduced when Governor Schwarzenegger signed the Deficit Reduction Act (DRA) into law, which modified important Medi-cal eligibility rules for long term care.  It’s to be expected that more change is on the way.  On this note, a HealthAccess.org blog by Cynthia Craft reports that the Senate Health Committee recently brought experts together to discuss how to restructure the Medi-cal program if the federal government grants California a five-year waiver period starting in September 2010.  If granted, Medi-cal will be able operate outside of current Medicaid rules in order to try out new changes.  Regardless of what may happen, careful planning is essential to protecting your assets for your loved ones.  Learn more about our Medi-cal help, and when possible, prepare early while you have the most options available to safeguard your estate from the rising costs of long term medical care.  Even if you’ve already been denied Medi-cal, we can often help you reapply and correct previous mistakes.  For experienced, up-to-date help with Medi-cal planning, contact San Diego Law Firm at (619) 794-0243.

What are valid reasons for challenging a will or trust?  Hollywood’s favorite example is the deathbed will, where – in a dramatic portrayal – the will is signed just moments before passing away, disinheriting everyone except for the person who callously pressured the testator into signing.  If there were a will contest here, what would the empty handed family members allege as grounds for the challenge?   One issue is capacity, because the deceased may not have had the level of capacity legally needed to change or create the will if the testator’s mental competence had grown too weak in his or her final moments.  Not only that, but the benefited person may have exercised duress or undue influence over the testator.  Other common reasons to contest a will include forgery, fraud, the existence of a more recent will, omitted children or spouses, and errors in executing the will.  If under the facts the legal requirements are met for any of these grounds, then the will or part of it is invalidated and property will instead be distributed according to California’s laws on inheritance, or possibly according to another will or trust.

The new California law on no contest clauses will be applied starting January 1, 2010, but it will affect wills that became irrevocable as of January 1, 2001 (for example, if a person dies on or after this date, the will becomes irrevocable at that point).  The law lists three categories of actions that are considered “will contests,” and anything else will not trigger the no contest clause and its threat of forfeiture.  If the challenger wins the will contest, then the no contest provision has no consequence because the will is ignored.  If the challenger loses, then typically the no contest clause will be enforced unless there was “probable cause” to dispute the will. 

It may be time to create or update your will and living trust to reflect this new law as well as recent case law.  We’ll also plan on the most effective way to include a no contest clause when you make amendments to these documents, and discuss the pros and cons of these clauses so you can decide on whether to include a no contest clause in your will or trust.  If you think you’ll be involved in a will contest, we’ll assess whether you’re a proper party to bring the action, and if you have possible grounds for a contest.  Whenever possible we’ll seek resolution without resorting to litigation.  Also keep in mind that a will contest must be brought within certain time limits so act soon.  Contact San Diego Law Firm’s experienced attorneys at (619) 794-0243 for help with any aspect of the probate and inheritance process.

To make or change a will, California law sets a threshold for mental capacity, requiring you to be of “sound mind.”  The level of capacity required here is different than it is for other legal matters, and generally means that you understand who your family is, what property you own, and recognize that the actions you’re taking are to create or change your will.  A person can be considered to lack capacity for many different reasons, including mental disorders if it affected the individual’s disposition of property, or even for temporary reasons like intoxication.  Even if a person has displayed a few isolated acts of questionable mental capacity, this doesn’t necessarily mean that at the time of making or changing the will, a person was of unsound mind, which is what’s required to prove a will is invalid on this basis.  That’s why the defense in the Brooke Astor case took great care in trying to establish that even though the prosecution’s witnesses testified to incidents demonstrating Astor’s possibly diminished mental capacity, at the moments at issue in the case, Astor knew exactly what she was doing. 

You may not find the need to change your will 38 times as did Brooke Astor, but it’s essential to have an up-to-date estate plan.  One of the main reasons behind having a will and living trust is to provide for your family according to your wishes when you’re gone.  Your personal and financial situation is bound to change, and so these documents need to be reviewed regularly to account for these changes.  Here are a few events or reasons that often trigger the need to update your will or living trust:

- Your marital status has changed, or you are unmarried but have a partner who you want to provide for

- You’ve recently moved to California, but had created a will or trust under another state’s law

- There’s been a significant change in your financial situation

- You no longer own assets specifically gifted in your will or trust

- You’ve had a child

- The person you elected to serve as your estate’s representative is no longer available

- You’ve decided to change gifts you made in a prior will or trust, or want to leave property to additional people

- There have been changes in income, estate, or gift tax laws affecting your plan

To amend your will, please Do Not simply take a pen to it and cross out what you want to change, while writing in new provisions in the margins.  If you do, you may be creating a legal nightmare later on for your kids or others who stand to inherit from you.  Many times, this can revoke what you’ve crossed out, yet what you’ve added in may not be a valid amendment, which could open the door to arguments during probate to try to at least bring back what you crossed out.  Valid changes to your will have to be written and executed just as your original will was.  If you need to make substantial changes to your will, then it may be easier to cancel your existing will through proper revocation methods and create a new one.  Make sure your will and living trust haven’t lost their value by becoming out-of-date.  Contact San Diego Law Firm’s wills and trusts attorneys at (619) 794-0243.