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Probate Calculator Form

In California, the probate code sets a statutory fee for attorneys and executors for the administration of an estate. Many families are shocked to learn just how much the probate process will cost them, often leaving them with a much smaller inheritance than they’d expected. Use our calculator below to estimate Probate fees for estates over $184,500, but less than $10,000,000. Probate fees are set by California Probate Code Section 10810.

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Home / Estate Planning / Use of a Special Needs Trust to Shelter an Inherited Home

Use of a Special Needs Trust to Shelter an Inherited Home

Estate Planning, Special Needs Planning

I was recently asked to address the following fact situation.  Mother is elderly and in failing health with limited assets other than the family home. Should she need to be admitted to a skilled nursing facility, it is likely Medi-Cal would end up footing the bill.  Daughter is disabled, receives public assistance and wants to know if there is any way she can inherit the home without impacting her public benefits.  My response was as follows:

If your mother goes into a skilled nursing facility (“SNF”) and Medi-Cal (“DHCS”) helps pay for that cost, upon your mother’s death, the DHCS has the right to file a claim against her estate and recover whatever has been paid out on her behalf.   If your mother owns a home at the time of her death, the typical technique is for the DHCS to enforce a Medi-Cal recovery lien compelling the home to be sold so they can make their recovery.  However, none of that should be of concern for you.

The Medi-Cal recovery rules provide that if any of your mother’s children are disabled at the time of her death, there is no recovery.  And that is true whether she leaves the home to you or not.  One option is to do nothing because if you are disabled within the definition of the Social Security Act, there will be no recovery.

But there is the option of your mother transferring the home to you in a Supplemental (Special) Needs Trust (“SNT”).   The SNT could hold title to the home for your benefit. One of the major advantages of doing so is that the home and other assets of the home would be protected from your creditors during your lifetime, and upon your death, would avoid any claim for recovery by the DHCS for benefits you received.  Also, the home held in the SNT could be sold, and the proceeds used for your care without negatively impacting your qualification for public assistance, whereas if you own the home directly (which is an exempt asset for purposes of qualification) and you sell the home, your receipt of the proceeds would result in you losing your public assistance.  Therefore, my recommendation is that you speak to your mother about creating a SNT for your benefit.

Litherland, Kennedy & Associates, APC, Attorneys at Law
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