Q.  Do you mind if I ask how you got started working with seniors and doing the kind of long-term care estate planning that you do?

A.  Not at all. In a word, I owe it all to my grandmother.

After my grandfather died in the 1960s, my grandmother, Lena Ponsky, became the head of our family in spiritual and religious matters, and I suppose we always thought that she would assume that role forever.

Just to provide a bit of background: my grandmother had always been a very strong and independent woman, always undertaking leadership positions in her volunteer organizations and charitable work.  Although she did not drive, she would walk or take the bus all over the East Bay to run errands and go to meetings, and I recall her doing so well into her 80’s. How independent was she? Well, on one occasion she needed to have a number of teeth extracted. Rather than calling any of her adult children or grandchildren for help going to and from the dentist, she said nothing to anyone and took herself back and forth to the dentist’s office by bus, holding a cold compress to her jaw all the way back home. In fact, we only learned of her visit to the dentist later that evening when she telephoned to chat about the events of the day.

However, as she approached 90 years of age, we noticed signs that she needed assistance. It appeared that she was not getting adequate nutrition, was not leaving her apartment very often, and it seemed that her eyesight was failing. To address these concerns, we ultimately found other living arrangements for her, including assisted living and later skilled nursing care. As we began to deal with her care, we found that we had many questions, not just about providing for her needs, but also about how to deal with her finances, pay for the cost of care, protect her estate and many others. However, we found the answers very difficult to come by, as very few people had the information that we needed. Indeed, we had to search far and wide for limited information.

Suddenly, a kind of light bulb flashed in my mind! And here’s what it was:

Until then, I – along with my attorney colleagues – had practiced traditional estate planning, centered on what I call “death planning.”, i.e. planning designed to pass on one’s assets to heirs and beneficiaries at death.  However, I had long felt that there was something missing from this approach, but in my early years as an attorney I could not quite put my finger on it.

Suddenly, while working to help my Grandmother, I realized what was missing. My grandmother’s circumstances essentially showed me a different way of thinking about seniors and elders in declining health. The question for them was not “What happens when I die?” but rather “What happens if I don’t die, but live on and need long-term care?”

And, right then and there, my current focus in Elder Law was born. As a result of that flash of insight inspired by my Grandmother, I have been serving the planning needs of seniors and those who love them by focusing on the legal and financial challenges of longevity, including the ever-present question of how to pay for the cost of long-term care.

And now you know the “back story”.

About Gene Osofsky

Q.  We have a dear, elderly neighbor who lives on SSI and, to my surprise, I learned that she is not eligible for food stamps. However, I hear that a new law was passed that will soon make her, as well as other persons on SSI, newly eligible for food stamps. Is that so?

A. Indeed it is! To the surprise of many, California residents on SSI have traditionally not been eligible for food stamps. The reason is buried in prior state legislative history going back to 1974. But the good news is that, under newly passed Assembly Bill 1811, Californians on SSI will soon now be eligible.

Under AB 1811, and beginning in the Summer of 2019, persons receiving SSI will be newly eligible for Cal Fresh, the California nutrition program, formally known as “Food Stamps”.  While the new law will mostly increase the numbers of persons eligible for food stamps, there will be some households that may be negatively affected by the change, principally those with both SSI eligible and non-SSI eligible persons sharing meals and food purchases in the same household. However, even as to them, those “mixed” households can still apply for enhanced nutrition benefits under supplemental food programs, all designed to increase access by all households to good nutrition.

The new law kicks in as of June, 2019, but persons who may be eligible to have their Cal Fresh re-evaluated are urged to contact their County eligibility worker now. Here are some contact points: (1) on the web, click on “GetCalFresh.org”, (2) by phone, call the Cal Fresh Benefits Helpline at 1-877-847-3663; or (3) personally visit your County Department of Social Services and apply.

Thanks for being the good neighbor and I hope this information helps your friend.

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References for more readingAB1811 and Scroll to Item # 10;   CalFreshFood.org; another resource: Expanding Cal Fresh to SSI/SSP Recipients;  Still more in “Justice in Aging” Fact Sheet.   Legislative Analysts’ study, including a short explanation entitled “What is the SSI Cash-Out” by Legislative Analyst’s Office.  See pages 4–5 for the history.

Q. Our father is 90 years old and is being cared for in a nursing home, which costs about $10,500 per month. We need to apply for a Medi-Cal subsidy to help with the cost, but Dad has an old insurance policy with accumulated cash value which puts him over the $2,000 Medi-Cal resource ceiling for a single person.  Our Problem:  Dad has severe dementia, can’t access the policy cash value on his own, and we don’t have authority to do it for him, as Dad never signed a Durable Power of Attorney. Further, the insurance company won’t even talk to us. Is there any way around this in terms of Medi-Cal?

A. Yes, indeed! It’s unfortunate that your father never created a Durable Power of Attorney (“DPOA”) which would now authorize you to access that policy on his behalf. But, so be it. The good news is that Medi-Cal recognizes that these situations happen and provides a solution. However, some background:

It is generally known that Medi-Cal allocates an applicant’s assets (which Medi-Cal calls “resources”) into two categories:  Those that are EXEMPT (such as a home, furniture, and one automobile) and those that are COUNTABLE (such as cash, savings, and investments).  Cash value in an insurance policy would normally be allocated to “countable” assets. And, you are correct, in that a single person over age 65 cannot have more than $2,000 in countable resources and qualify for a Medi-Cal Long Term Care (“Medi-Cal LTC”) subsidy.

However, what is not well known is that there is actually a third category of resources, i.e. resources that are UNAVAILABLE.  Resources are unavailable when they cannot be accessed, such as when (1) there is a dispute pertaining to their ownership, (2) where there are various co-owners who object to sale or liquidation, and—apropos to your own situation – (3) where the owner is comatose or suffers from dementia, cannot access them himself and there is no DPOA which authorizes an agent to do so on his behalf. Your situation would fall into the last example and be considered unavailable when tallying up your father’s countable resources when seeking a Medi-Cal LTC subsidy.

Here’s the good news:  So long as an applicant’s resources are unavailable, they are treated the same as resources that are exempt, i.e. they do not count when determining whether an applicant is under or over the Medi-Cal resource cap.  That is precisely your situation. Thus, the insurance policy cash value should not disqualify your father from a Medi-Cal LTC subsidy.

My suggestion is that you secure a doctor’s letter attesting to your father’s incapacity and corresponding inability to handle his financial affairs. Then, when you submit his application for a Medi-Cal LTC subsidy, include that doctor’s letter with the other required documents, advise that your father never created a DPOA which would authorize an agent to handle his financial affairs on his behalf, and assert that the insurance policy cash value should therefore be considered “unavailable”.  Some Medi-Cal eligibility workers may be unfamiliar with this concept, and so you might do well to engage an Elder Law attorney with experience in these matters to help you.

The upside benefit of securing a Medi-Cal LTC subsidy can be quite dramatic.  By helping you pay for your father’s care, the subsidy can help relieve what would otherwise be tremendous financial stress upon your family. Good wishes in your effort.

Q. I am in my late 80’s and am updating my estate plan. I find I have an important decision to make:  in my Power of Attorney (“POA”) and my Trust, if I ever lose mental capacity should I require the opinion of two doctors, or just one, to certify my incapacity before duties transfer to my Agent or Successor Trustee? Requiring two doctors to sign off would seem to give me greater protection against a “wrong call” by only one. What do you think?

A. That is really an excellent question and my compliments for giving it special thought.

A bit of background:  The most common choice in these matters is to require that two (2) physicians must render an opinion on mental incapacity before responsibility shifts to one’s designated successor.  This approach may make sense for younger individuals, who might reasonably believe that requiring two medical opinions will protect against a “wrong call” by a single physician. Hence, the “two doctor” requirement is typically the default approach in most estate plans.

However, for older persons, or those who – in the future – may need care in a facility, this two-doctor requirement could pose a big problem for one’s family, probably at a time of stress, and may actually make managing one’s financial affairs much more difficult.  Here’s why:

When and if incapacity becomes an issue, it is likely that you, the principal, will then be residing in a care facility, such as a nursing home.  In the nursing home and in some other care facilities, typically only one physician covers the entire facility, visits each patient at a prescribed interval, and directs his or her care. In those situations, it is very difficult to arrange for a visit by a second physician, as there is typically no second doctor who also makes those rounds.

Thus, to comply with a “two doctor requirement” in one’s POA or Trust, your family would need to search for a physician outside the facility who makes “house calls” to nursing home patients, and who is willing to assess you for legal capacity and write an opinion letter based upon that assessment.  It would also be an expense that would not likely be covered by private insurance, Medicare or Medi-Cal. This process can be very difficult for one’s family, especially at a time of stress, and can actually impede the prompt and smooth transfer of responsibility for financial affairs to one’s designated successors.

For these reasons, in our practice we consistently recommend that our clients only require the opinion of only one (1) physician to establish their incapacity. By doing so, we believe that we make the process easier down the road for the client’s family, help to smooth transition to his or her designated successors, and thereby help ensure uninterrupted management of our client’s financial affairs.

In this regard, we typically provide in our legal documents that the client’s incapacity, if it ever occurs, is to be “established by the opinion of one (1) physician, licensed in the state in which the principal then resides, who has examined the principal, and who renders an opinion in writing that the principal is incapable managing his or her own financial affairs.”

You may wish to discuss this matter with your family and with your attorney and consider using the “one (1) physician” requirement for the reasons discussed.

Q.  One of my grandchildren has a disability and receives SSI and Medi-Cal. I would like to leave him a bequest from my estate when I pass. But won’t doing so cause him to lose his public benefits?

A.  Not if you plan correctly. As you probably know, your grandson cannot have more than $2,000 in savings or other nonexempt assets and still remain eligible for these benefits. Thus, the receipt of an inheritance would likely put him over that ceiling and terminate his eligibility. However, the law permits you to create a Special Needs Trust (“SNT”) to receive his inheritance without jeopardizing his public benefits.  The law’s purpose is to allow you to set aside “private funds” to supplement his SSI and Medi-Cal, and to thereby enhance his qualify of life in a kind of public—private partnership.

You would create the SNT as part of your own estate plan, and you would designate someone other than your grandson to be the trustee, such as another family member or even the trust department of a bank. So long as properly created and managed, the funds in the SNT would supplement his needs by direct payment to third-party providers of goods and services, while still preserving your grandson’s public benefits.

Currently, a single individual on SSI, living independently, would receive $932 per month in California and $988 if blind (in 2019). Since the SSI program is designed to cover only food and housing expense, it would be best for the SNT to pay for expenses which are not food or housing, e.g.  transportation, cell phone, computer, recreation, etc.  Reason: payments for expenses which are not food or housing result in no reduction in his SSI or Medi-Cal benefits.

However, the SNT could even assist with the cost of food or housing, but in exchange for only a modest reduction in SSI.  Example: if the cost of an apartment for him were $1500 per month, your grandson could pay, say, $200 of the cost out of his SSI, and the SNT could pay the $1,300 balance directly to the lessor.  Your grandson’s SSI would then only be reduced by a modest $277 per month. Not a bad trade-off.  Further, if the SNT had sufficient assets, it could actually pay much more than $1,300 per month to providers of goods and services for his benefit, and here’s the beauty about how this works: no matter how much the SNT pays toward his monthly housing or food expense, the maximum reduction in his monthly SSI benefit, in any single month, would never exceed $277 (in 2019).  Thus, a well endowed SNT could generate a substantial benefit to a person with a disability, with only a modest reduction in his or her SSI and usually none to his or her Medi-Cal eligibility.  The SSI rules which govern here are referred to as the “ISM Rules”, where ISM stands for ‘In Kind Support and Maintenance’.

Caution: the SNT should never distribute money directly to your grandson, as there would then be a dollar for dollar reduction in his SSI. Rather, payments should always be made to third-party providers of goods and services on his behalf.

Readers with a family member receiving public benefits, such as SSI or Medi-Cal, should always consider creating an SNT as part of their estate plan and thereby preserve their loved-one’s continuing access to those benefits while still providing funds for his or her supplemental needs.

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NOTE:  The Special Needs Trust is sometimes referred to as a Supplemental Needs Trust.  They are essentially different names for the same kind of trust.

Q.  My wife and I are about to prepare Advance Health Care Directives, with an option to donate our organs. I hear there is a new law that touches on this.  Do you know anything about this?

A.  Yes. The new law is AB 3211, effective January 1, 2019, and designed to make it easier for persons who use the statutory form Advance Heath Care Directive (“Directive”) to donate organs upon death.  If you use the basic statutory form, the law simplifies the check-off-the-box choices, reducing them from six down to only two.  It provides that—unless you opt out of organ donations—the default directive is that you have consented to same.  It also clarifies that your failure to opt for organ donation in the Directive, does not prevent your election to do so on your DMV Driver’s License.

The purpose behind the new law is to increase the number of available organs for life saving transplantation. Reportedly, there are 23,000 Californians awaiting lifesaving organ transplantations.

However, the most significant feature of the new law is to authorize the temporary medical procedures necessary for doctors to evaluate and/or maintain your organs and/or tissues for harvesting and transplantation.  This change was, I believe, designed to address the apparent inconsistency in a Directive, whereby an individual might opt not to prolong life if he/she were comatose, but whereby that same person had opted for organ donation.  Now, without violating your choice not to artificially prolong your life, it can nevertheless be temporarily prolonged just for the limited purpose of evaluating and maintaining your organs for transplantation. To me, this makes good sense and avoids the medical — legal dilemma that the transplant team might otherwise face.

Notwithstanding the new law, you may still opt out of organ donations, and you can also still specify for what purpose your organs may be used, i.e. transplant, therapy, research, or education.

Note: if you do not wish to make organ donations, you must specifically opt out on the form. If you fail to specifically opt out, but do not otherwise indicate that you do not wish organ donations, then an “authorized individual” on your behalf may still opt for organ donation after your passing.  An “authorized individual” would usually include a spouse or a Domestic Partner (as defined in the Family Code). However, apart from the decision to authorize organ donations, even a spouse or Domestic Partner may not be able to consent to the withdrawal of life-sustaining treatment; instead there must be “clear and convincing evidence” of your own wishes, and the decision as to whether that standard has been met would likely be up to a judge in the context of a legal proceeding brought for that purpose.

To be sure, the new law does not require that you use the statutory form. You may still prepare, or ask your attorney to prepare, a customized Directive suitable to your specific wishes.

So, if you and your wife wish to authorize organ donations, and you opt to use the new statutory form, be sure to verify that it complies with the new law, fill it out completely and make your wishes clear on the form.  To those readers who have already prepared Directives, I suggest that you review them to make sure your wishes are clear, and make it a point to discuss them with your designated Health Care Agents.

References:

Assembly Bill 3211, modifying CA Probate Code §4701; CA Probate Code §’s 4716 (Domestic Partner of patient has same status as spouse); CA Family Code § 297 (“Domestic Partner” defined); Probate Code §4643 (“surrogate” defined), and § 4711–4715 (health care surrogates). For more information on Organ Donations, generally, and to sign up to be an Organ Donor on the California Registry, click on this link to “Donate Life California”. A fill-in-the-blank form based upon new law is now available on the California Attorney General’s website:  Advance Health Care Directive form.

Q. I have three annuities. If my wife or I need to go into a nursing home, do we need to cash them in to be eligible for a Medi-Cal subsidy?

A. Well, like many things in life, it all depends. If your annuities are held inside an IRA owned by you or your wife, and you are both over age 70 ½ and receiving Minimum Required Distributions under IRS rules, then you won’t need to cash them in. Otherwise, you will need to consider the following:

Deferred Annuities:  If the annuity payouts have been deferred (“Deferred Annuities”), then Medi-Cal will count their cash values. The next question is whether their cash values, when combined with your other savings and investments, puts you over the Medi-Cal resource ceilings: $126,420 (married individual); single individual, $2,000 (for 2019). If so, we sometimes refer to this as being “over resourced”. If they do put you over, then you will need to take action. Some possible planning strategies:

(1) Opt to Start Payouts:  If you opt to begin receiving “periodic payments of principal and interest”, in equal monthly payments, and provided that the pay-outs are scheduled to fully exhaust each annuity within the actuarial life expectancy of the owner, then their remaining values won’t count as a Medi-Cal resource.

(2) Cash In & Make Exempt Purchases: You might cash in one or all of the annuities, as necessary, and then use those proceeds to make purchases which Medi-Cal considers exempt, such as:  home maintenance, home improvements, home mortgage pay-down, purchase of cemetery plots, funeral plans, or household furnishings.

(3) Convert Annuities: Convert the annuities with cash value into income-only immediate annuities without cash value (see below).

(4) Cash In & Gift Away: Cash in the annuities which put you over the resource ceiling and then make what I call “strategic gifts” to your children or other trusted family members, but subject to the following CAUTION: if you choose this gifting option, you are very strongly urged to do so only under the strict guidance of an elder law attorney with experience in these matters. Why? Because gifting in this context is very “tricky” and requires careful compliance with the Medi-Cal rules, which are actually designed to discourage gifting.  If you attempt a gifting program on your own, and you do so incorrectly, you may actually end up disqualifying yourselves from a Medi-Cal subsidy.

Immediate Annuities: If your annuities are irrevocable, income-only “immediate annuities” without cash value, and provided that they are designed to pay out to their owner the full value within his/her actuarial life expectancy, then they will not count against the Medi-Cal resource ceilings. However, the income that you thereby receive from them may count toward your monthly “Share of Cost” (co-pay) for nursing care.

On the other hand, if these immediate annuities are not so designed, then the funds used to purchase them may be considered a disqualifying transfer of assets. This is a bit different from being “over-resourced”, but has a similar effect:  If so construed, you may be found ineligible for a Medi-Cal subsidy under the transfer penalty rules, and this ineligibility may extend for a lengthy period of time.

To be sure, the whole subject of annuities in the Medi-Cal context is quite tricky.  Your best bet is to seek guidance from an experienced elder law attorney before you take any action.

 

 

Q.  My husband has dementia and I wonder about my ability to refinance or even sell the home, as he cannot sign. The home is held in a Living Trust. Can you advise?

A. The short answer is that, under these circumstances, it may be easier for you to sell the home than it would be to refinance. Here’s why:

Sale of Home: Your Living Trust probably provides that both of you are co-trustees, but that when one of you dies or becomes incapacitated the other becomes the sole trustee with full power to convey trust assets.  So, assuming that you can document your husband’s incapacity as required by the terms of the trust, the trust terms would then typically permit you, as sole Successor Trustee, to convey clear title to the buyers on your signature alone. Then, as Successor Trustee, you would usually then be able to sell your home. In these situations, title companies are usually willing to insure the passage of title to your buyer. In the sale situation, unlike the Refinance situation, you are not the one seeking a loan; instead, it is your buyer who will apply for the loan and who must meet his or her lender’s requirements.

Refinance: However, if your goal were to refinance an existing loan on your home, this could be problematic. In this situation you will need to comply with your lender’s requirements. Many lenders require that the home be removed from trust during the loan escrow and require that all loan documents be signed by both homeowners as individuals, rather than as trustees. Once removed from trust, your authority to sign would no longer be governed by the trust instrument.  Instead, it would be governed by a Durable Power of Attorney (“DPOA”) if one exists.  However, your lender may not accept that DPOA, if, for example, it had been signed long ago, or it does not adequately identify your home, or it does not clearly give you authority to encumber the home to secure the loan.  Also, the lender may require that you obtain physicians’ letters certifying both (a) that your husband had full capacity when the DPOA was originally by him signed years ago, and (b) that he currently is incapacitated.  A letter certifying your husband’s capacity years ago could be a problem if, for example, your husband’s then physician is now unavailable.

Even lenders who do not require that the home be first removed from trust, may still require signatures by both the acting trustees and by both homeowners as individuals.  This appears especially true with regard to Reverse Mortgages. So, again, even in this situation you may need a “friendly” lender and a DPOA that is acceptable to the lender.

Possible Work-a-rounds: Here are my suggestions if you wish to refinance and anticipate that you may encounter lender resistance: (A) shop around: some lenders, such as credit unions, may have more relaxed standards.  For example, some may not require that you remove the home from trust in order to refinance and may accept your signature, alone, on all loan documents as sole successor trustee; and/or (B) consider a Petition to the Superior Court asking the judge to issue an order which substitutes for your husband’s signature. This procedure is available in California under what is called a Petition for Substituted Judgment, so named because it asks the court to substitute its judgment for that of your husband. In most cases, the lender would then accept the resulting court order in lieu of your husband’s signature. For more on Substituted Judgment, click here.

Whether you seek to sell, or refinance, I recommend checking out these issues with one or more title companies and/or lenders early on and before you get too committed to a specific course of action.

Q. My brother created a trust a few years back, naming our sister as one of his beneficiaries and me as the Trustee. He recently died and we now have a problem:  our sister receives public benefits (Medi-Cal and SSI) and the receipt of an inheritance would cause her to lose those benefits.  Is there a way to change the trust to make some other arrangement for her that will allow her the benefit of the bequest, but also permit her to keep her public benefits?

A. Very likely, yes! The goal would be to reform your brother’s trust to direct your sister’s share into a Special Needs Trust (“SNT”). If properly set up and managed, the assets in the SNT would permit her to continue receiving her public benefits, even while the SNT pays for items which are not covered, or not fully covered, by her Medi-Cal and SSI: Examples: automobile, computer, nicer apartment, furniture, and vacations.

But the problem, of course, is that your brother’s trust leaves the bequest to your sister directly, and not into an SNT, and he is no longer alive to change it. While this is indeed a public benefits problem for her, there may now be a remedy!

Decanting Into A New Trust: A brand new California law just became effective this year (2019), called the “Uniform Trust Decanting Act”.  While we normally think of “decanting” as referring to the transfer of wine from one container to another in order to separate it from older sediment and rejuvenate the wine in the newer container, this vintner’s term has a similar meaning in the world of trusts: Decanting a trust allows the trustee to transfer assets from an existing trust with unwanted provisions into a new trust with more favorable provisions.

To use the new Decanting Act you should engage a knowledgeable attorney to create a new trust which contains the desired SNT provisions for your sister’s share.  Your attorney would then give your sister and all other beneficiaries 60 days notice of the proposed change. If there is no objection, then after the 60 day notice period you would adopt the new trust as your brother’s trust, and then move the assets from his old trust into the new one with the SNT provisions. Alternatively, you might just propose an Amendment as to just your sister’s share, leaving all other trust terms the same. This procedure would protect your sister’s share while allowing her to maintain her eligibility for Medi-Cal and SSI. The beauty of decanting is that it can be handled without court involvement and without the corresponding expense and uncertainty of a court proceeding.

Judicial Modification: If any beneficiary objects, then you have the more traditional option of petitioning the superior court for an order reforming the trust to include the necessary SNT provisions. Before January 1 of this year, this was the traditional approach in situations like yours.  Now, with the new Decanting Act, it can be used as a “back up” if any beneficiary objects.

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A further note on the new Decanting Act:  using it to create a SNT for a beneficiary receiving public benefits is merely one use. It can also be used to modify other provisions of an older trust: Examples: to update tax provisions, clarify ambiguities, change successor trustees, re-designate the place of trust administration, and — in some cases — to unwind an unnecessary A – B Credit Shelter Trust.

This new procedure should certainly be considered in your situation.

References:   “Uniform Trust Decanting Act”, effective January 1, 2019. Uniform Law, Text and Comments. See page 69 re: Credit Shelter Trust Issue.

Special Comments For Elder Law and Special Needs Attorneys:

1) The “Self-Settled” SNT Issue:  When considering Decanting into a newly created Special Needs Trust, timing is critical if the goal is to achieve the benefit of a SNT while avoiding the requirement of a post-mortem “pay back” to Medi-Cal.  Basically, the decanting in this context should be completed prior to the time that the beneficiary vests as to principal: Decanting prior to vesting would likely permit the creation of the SNT to be characterized as a Third Party SNT (without the need for post-mortem payback provisions), while decanting afterward may require that the SNT be characterized as a First Party SNT (i.e., as a “self-settled SNT”) with the requirement that it contain payback provisions. See, Kroll v New York State Dep’t of Health (App Div 2016) 39 NYS3d 183, aff’d (Oct. 5, 2016) NY Slip Op 06499. Whether this New York case will govern similar proceedings in California, or other states, is presently undetermined.  That said, the careful practitioner desiring to decant to a SNT without needing to include “payback” provisions would be wise to observe its holding, whenever possible, until the law in California on this point is clarified. To be even more cautious, I would recommend that — if time permits — the Decanting be handled pursuant to the Notice provisions of the Act, rather than via the Consent provisions, so as to render it less likely that the creation of the SNT will be considered the volitional act of the target beneficiary and hence a “self-settled” SNT.

2) The Problem for Over-Age 65 Beneficiaries: If the Decanted SNT is later characterized by Medi-Cal or SSI as a “First Party Self-Settled SNT”, that is a big problem for a beneficiary age 65 years or older. Reason: a beneficiary over age 65 cannot self-settle a SNT under any circumstance. See, 42 USC 1396p(d)(4)(A). The only option for this beneficiary is to join and fund a Pooled Special Needs Trust, as authorized by 42 USC 1396p(d)(4) ( C). However, even this option has been clouded by a recent appellate decision out of Iowa, called Cox and Cox vs. Iowa Dept of Human Services, decided November 30, 2018, wherein the funding of a Pooled SNT by a married couple — both of whom were over age 65 — was determined to be a transfer for less than fair market value, resulting in a transfer penalty medicaid disqualification for each spouse. That Iowa decision notwithstanding, the rule in California has long been that a person of any age may join a Pooled SNT without jeopardy to their Medi-Cal eligibility. See, 22 Cal Code Regs §50489.9 ( c). Indeed, the California Dept. Of Health Care Services acknowledges as much on its own website. See Special Needs Trust notice, wherein it recites that a person of “any age” may join a Pooled SNT. See CEB, Special Needs Trusts, Planning, Drafting and Administration, at §12.9.

However, there still remains concern as to SSI eligibility under Federal Social Security Law for the over-age 65 SNT beneficiary where the decanted SNT is deemed a “Self-Settled” First Party SNT. The concern is that SSI (unlike Medi-Cal) may impose a transfer penalty of up to 3 years upon funding a Pooled-SNT by the over-age 65 beneficiary. See CEB, Special Needs Trusts, Planning, Drafting and Administration, at §12.10.

For a more detailed article prepared for California Elder Law and Special Needs attorneys, click on the following article entitled “The New CA Decanting Statute: Some Advisory Cautions”.

Q. My wife and I are considering selling our home and purchasing a replacement home in California to be closer to our children? I hear there may be some way to transfer our very low property tax to our replacement home. Do you know anything about this?

A. Yes. If at least one of you is at least age 55, or disabled, you may be able to transfer your low “base year value” from your current residence to your new residence. But, there are conditions and restrictions, including geographic limitaions, some of which are as follows:

1) The new residence must be located either within the same county as your original home, OR, within one of the following 10 counties which now permit transfers in from other counties:  Alameda,Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne and Ventura. Note: El Dorado County just ended its program, except as to transactions that were in escrow as of November 7, 2018.

2) The replacement residence must be of “equal or lesser value” to your original residence. This is determined by comparing the sale price of your old residence with the purchase price (or the construction cost) of your new residence.  If the replacement home is purchased prior to the sale of your existing home, the purchase price may not exceed 100% of the sale price of your existing home.  But, it can be up to 105% if you purchase your replacement home within the 1st year following sale, and up to 110% if purchased within the 2nd year following sale. Caution: If these equivalency tests are not met, there is no partial benefit. Thus, it is all or nothing regarding the base-year transfer rule, and so you need to be very mindful of the numbers when planning.

3) The replacement home must be purchased or newly constructed within two years either before or after the sale of your original home.

4) You must formally apply for this base-year transfer by submitting the appropriate form to the County Assessor of your new county within three (3) years of the date the replacement dwelling is purchased or newly constructed, although the Assessor can grant relief for late filed claims.

5) You can only use this benefit once, with the following exception: if you have opted for this benefit once based upon age, and you later become “severly and permanently disabled”, you may then use it a second time based upon your disability.

The law regarding base-year transfers has some quirks and you should read up on them as part of your planning.  A good resource is the website of the Alameda County Assessor, which offers information Notices, Questions & Answers, and the relevant Claim Form. The Assessor’s phone number for questions pertaining to Base-Value Transfers is (510) 272-3787. I hope this information helps and extend good wishes on your planned relocation.

References:  Cal. Rev & Tax Code § 69.5;    CAL Constitution Article XIIIA, §2(a) [valuation of real property]; BOE Letter to Assessors 2016/034 (9/15/2016) [List of California counties which have adopted Ordinances permitting transfers in of Base Year Values from other counties]. Alameda County Assessor Information notices:  Notice #1 Re: Base Year Transfers, with Claim Form;  Notice #2 [with Questions & Answers].

Note: Base Year Value transfers are permitted for property substantially damaged or destroyed by a disaster.  CA Rev & Tax Code § 69 and § 69.3.