Inheritances and Medi-Cal: Be Careful, Plan Ahead

Mistakes can be made when it comes to inheritances and Medi-Cal. Those mistakes can be costly.

When a person is drawing Medi-Cal benefits and inherits money or property, that inheritance jeopardizes the benefits. The inheritance must be handled carefully to minimize expensive penalties. What “careful” means, though, can be misunderstood without the necessary expertise.

The Right Steps for Handling Inheritance

The first and best idea is to call experienced elder law attorneys like us. (An even better idea is to call us well before any inheritance becomes a “problem.” The sooner you call us, the more money we can likely protect for you.)

A California attorney was recently suspended partly because he mishandled this Medi-Cal-inheritance issue. The mistaken advice was that to protect the benefits, the person who stood to inherit should “disclaim” or “renounce” the inheritance – in other words, give it away to someone else.

Medi-Cal Rules and Inheritance Context

That advice would have been OK in the tax context. It was not OK in the Medi-Cal context. The Medi-Cal rules count inheritances regardless of whether the recipient keeps them or passes them on to someone else. The bad result, in such cases, is that the person receiving Medi-Cal would be charged just as if he or she had taken the money, even if he or she gave it away, and the person’s benefits would be docked accordingly. This can be a very expensive misstep.

The better result would be to consult us immediately. We can advise you on necessary techniques such as setting up a Special Needs Trust. If the right strategies are used, Medi-Cal would count the inheritance only in the month of receipt and the Medi-Cal recipient can continue to receive his or her government benefits the following month.

An even better result would be if the person leaving the inheritance had consulted us first. We know how to structure that person’s financial arrangements, to protect the people to whom the person wants to leave his or her legacy.

We know that the complicated areas of Medi-Cal law well and we have helped many people successfully meet the challenges it poses. Please contact us at our Huntington Beach office today for a FREE 60-minute consultation for your legal needs.


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