Month: September 2017

New beneficial CA Medi-Cal estate recovery rules.

Posted on by Craig Mathias

Source: SB 833; Welfare and Institutions Code Sec 14009.5

Effective for Medi-Cal recipients who die on or after January 1, 2017: Medi-Cal can now only make a recovery claim against estate assets subject to probate that were owned by the decedent at the time of death.  (Before this change, all assets owned at death were subject to estate recovery claims).

Short summary:  If the Medi-Cal recipient has placed his/her residence in a revocable trust (e.g., a “living trust”), it is not an asset which will be subject to probate and Medi-Cal won’t be able to make a recovery claim against it.

There are other details in this process. Please contact us if you would like a referral to an estate/trust attorney who can give you professional guidance in your particular situation.

Sale of Residence to Parents: Part Sale/Gift

Posted on by Craig Mathias

Fiscalini v. Commissioner, TC Memo 2017-163

In summary, a taxpayer sold his residence to his parents for a sales price of $975,000.  He received no cash directly.  The parents paid off his mortgages with a total of $664,000.

The Tax Court determined that the mortgage relief was the effective sales price of $664,000. Minus basis and the $250,000 Section 121 exclusion for sale of a residence resulted in gain of $122,000.

The remaining equity of $311,000 ($975k – 664k) was deemed to be a gift from the taxpayer to his parents.