Van Nuys, CA asked in Estate Planning and Tax Law for California

Q: I live in California and want to set up a Medi-Cal qualifying trust for my mom's assets, have tax question about it

This would be an irrevocable trust; is it correct that she would not be allowed access to the trust income to qualify for Medi-Cal? If so, does that mean I, as the beneficiary of said irrevocable trust, would have to pay personal income taxes on the trust income? Or is there any way we can both have the trust pay the taxes and still qualify my mother for medi-cal?

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1 Lawyer Answer
Sally Bergman
Sally Bergman
  • Estate Planning Lawyer
  • San Mateo, CA
  • Licensed in California

A: These types of irrevocable trusts are typically set up as "grantor" trusts which means that they remain under the Social Security number of your mother and the income is taxed to her. I hope this is not something you are trying to set up yourself as they are typically only prepared by qualified Elder Law attorneys. As well, if she does not need to immediately qualify for long term care Medi-Cal benefits, an irrevocable trust may not even be needed as in California we have many different strategies we can utilize when that need arises.

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