Exceptions to the Transfer Penalty
Transferring assets to certain recipients will not trigger a period of Medi-Cal ineligibility. These exempt recipients include the following:
A spouse (or a transfer to anyone else as long as it is for the spouse’s benefit)
A blind or disabled child
A trust for the benefit of a blind or disabled child
A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medi-Cal applicant, under certain circumstances).
In addition, special exceptions apply to the transfer of a home. The Medi-Cal applicant may freely transfer his or her home to the following individuals without incurring a transfer penalty:
The applicant’s spouse
A child who is under age 21 or who is blind or disabled
Into a trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medi-Cal applicant, under certain circumstances)
A sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home
A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.
California Rule: California has very generous provisions that allow the transfer of one’s home to virtually anyone with no penalty period. However, due to the complex interplay of property tax, income tax, and the estate recovery rules, it is highly recommended that you obtain legal assistance before transferring your home.
