I’ve heard about Medi-Cal planning but it doesn’t seem legal & I’ve talked to lawyers who don’t even know about it. Is this really legit?

This is such a common question! We try not to be offended by it, because of course we would never do anything that is illegal or unethical. But we do understand that you don’t know us (yet) and may not be aware of our honesty, high ethics and good moral character. For more on our personal mission to help seniors, see “Christina’s Story.”

There are a couple reasons why Medi-Cal planning is still somewhat unknown. First, the strategies for Medi-Cal planning have changed a lot over the years. In the 1980s, spending down your estate was really the only option and lawyers weren’t very involved. It was really only those with really large estates that were doing any kind of planning. As time passed, those qualifying for Medi-Cal started giving their assets to their children for safekeeping, essentially, and this strategy worked for a long time. But when the economy crashed in 2009, many aging parents saw their children use and spend their money out of what they saw as necessity to save their own homes when they were struggling. Thus the strategy for gifting to adult children became less attractive and lawyers started to look at what else would be possible. Then lawyers realized that the strategies used for very wealthy clients to preserve their estates could also be used for smaller estates to qualify for Medi-Cal, and a somewhat new area of law was born. Because it’s rather new and the rules are so complex, most lawyers either don’t know about it or choose not to handle benefit planning. But not knowing about it doesn’t mean there’s anything untoward or unethical or illegal about it!

But you may still be wondering how all of this is legal, especially if you’ve never heard that there are ways to qualify for Medi-Cal if you have more than the maximum income and assets. We’ll return to the tax analogy that’s already served us: One way to understand is to think about the income tax return you file every year & the income tax you pay. We have in our society certain resources, such as accountants/CPAs (and bookkeepers!), and programs such as TurboTax that help us to reduce the taxes we would otherwise pay without these resources. Just think of what we would do if all we had was an IRS tax return form and the IRS instructions to file our taxes, and no help from anyone or anywhere?! Indeed, the government/IRS is not going to come to us with tips and assistance for us on how to reduce our taxes! It is up to the CPAs to review the tax code and its changes and inform us of ways we can lower our tax obligation. In fact, in law school I learned that there is a court case whose specific holding was an explicit right for Americans to do all they can (within the limits of tax and other laws) to reduce our tax payments. We have the right to do this, which you may not know, but strategies to reduce taxes are much more well-known because we all pay taxes (and want to reduce them!). The Medi-Cal benefit and application are as complex as a tax return. But in contrast to tax strategies, Medi-Cal is not only not well-known, but the resources to help seniors remain lean and hard to find. But that doesn’t mean they’re untested or unethical or illegal. Just like with reducing taxes, we’re carefully examining and evaluating all of the rules and regulations, abiding by them, and taking advantage of the options and opportunities available to us within the confines of these rules and regulations. We do nothing that’s remotely illegal and have very high ethical standards that we maintain.

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