How To Avoid Fraudulent Transfers in California Medicaid Planning

“If you are applying for Medicaid benefits, or if you expect to apply in the future, there are certain rules and regulations relating to eligibility for Medicaid benefits that you should be aware of.”

HOW TO AVOID FRAUDULENT TRANSFERS IN CALIFORNIA MEDICAID

PLANNING

Scott P. Schomer Los Angeles Estate Planning and Elder Law Attorney

http://www.schomerlawgroup.com/


How to Avoid Fraudulent Transfersin California Medicaid Planningwww.schomerlawgroup.com 2

Medicaid is a benefits program that is considered a “payer of last resort.” That

means, all other sources of payment for medical treatment are required to be

used before Medicaid benefits will begin to pay for long-term care.

In general, applicants for Medicaid must have very limited income. So, if your

assets exceed that limit, and you begin giving away your property, you must be

sure to avoid fraudulent transfers.


Medicaid Eligibility in California

California’s state Medicaid

program is referred to as Medi-

Cal. You must be either a U.S.

citizen, U.S. national,

permanent resident or legal

alien, and you must be a

California resident.

Applicants must have very

limited income and be either

pregnant, blind, have a

disability or a family member in

your household with a

disability, be responsible for

children under 19 years of age,

or be 65 years of age or older.


The Definition of a Fraudulent Transfer

Generally speaking, a “fraudulent transfer” is made when you move your assets

out of the reach of creditors, when you are aware of a creditor’s claim. The

classic example is when an individual did not have an asset protection plan in

place, but after they have a judgment against them, they attempt to transfer

their assets to someone else.


Fraudulent Transfers Relating to Medicaid Eligibility

A fraudulent transfer can also occur if an individual gives away assets in order to

qualify for

Medicaid. There

are specific laws

that discourage,

and even punish,

individuals for

giving away their

property in

anticipation of

applying for

Medicaid

benefits.


The “Five Year Look back” Period

Federal law actually requires state Medicaid agencies to investigate transfers

and gifts made by applicants during a specific period of time, know as the five

year look-back period. This means, if you give away any of your property or

assets right before applying for Medicaid, you may be considered ineligible for

long-term care benefits for certain period after your application is acceptedYour

state Medicaid agency will examine all transfers you made during the five years

before you submitted your application, no matter how innocent they may have

actually been. This potential penalty period only applies to individuals needing

long-term care in an institution, or who receive home health care. It does not

apply to individuals who need what is referred to as acute care, such as

hospitalization or physician services.


Factors Considered in Determining Fraudulent Transfers

You may be found guilty of a fraudulent transfer if the following occurs:

• You transferred any property to someone else

• You received less than fair market value for it

• The transfer left you unable to satisfy a creditor

The laws prohibiting

fraudulent transfers

are based on the

idea that, once you

have incurred a

legitimate debt, the

property needed to

satisfy that debt

constructively

belongs to the

creditor. If you try to

get rid of it, so the

creditor cannot be

paid, you have made

fraudulent transfer.


How to Transfer Your Assets the Right Way

The way to avoid fraudulent transfers is

to have an asset protection plan in

place before you need the protection.

This means, before you apply for

Medicaid benefits. When your assets

are protected correctly, creditors

(including Medicaid) will have a difficult

time establishing a fraudulent transfer

occurred.

.Avoid the Appearance of Fraud

There are certain types of property transactions that courts typically see as

fraudulent. Avoiding these kinds of transactions can go a long way toward

avoiding a finding of a fraudulent transfer:


• A transfer or obligation made to an insider (close relative or friend)

• Retaining possession or control of the transferred property, even after the

transfer

• A transfer of substantially all the debtor's assets

• Concealment of assets

• Being insolvent or becoming insolvent shortly after the transfer is made

• A transfer occurring shortly before or shortly after a substantial debt is

incurred

We all have a right to establish an asset protection plan, and to transfer our

assets as we see fit. Though creditors may be quick to suggest that a transfer of

assets is fraudulent, if you create a proper asset protection plan ahead of time,

you should not have anything to worry about, when it comes time to submit that

Medicaid application.

If you have questions regarding fraudulent transfers, or any other Medicaid

planning needs, please contact the Schomer Law Group either online or by

calling us at (301) 337-7696.

http://www.schomerlawgroup.com/contact-us/


About the Author

Scott P. Schomer is a graduate of Boston University School of Law and is a

frequent lecturer on estate planning and elder law issues, having appeared

on local and national television discussing the importance of estate

planning. Scott has an extensive litigation background and has over the

years obtained in excess of twenty five million dollars in judgments and

verdicts for his clients. Scott is a member of the Probate Volunteer Panel

and has been appointed by the Los Angeles Superior Court to represent

numerous parties in contested proceedings in the probate court. Scott has

also served as Judge Pro Tempore of the Los Angeles Municipal Court and

also been appointed by the court as an expert in probate matters. Because of his extensive

experience, Scott brings a unique perspective to helping protect his clients.

SCHOMER LAW GROUP

Schomer Law Group is a professional law corporation that specializes in elder law, probate,

wills, trusts and conservatorships. We counsel clients on the unique legal issues relating to

advancing age. Whenever possible, we prefer to help clients plan for the future, avoid probate,

minimize taxes and solidify their legacy. We also help clients plan for possible incapacity and

long-term care. We help our clients deal with issues of aging with independence and dignity. In

addition to estate planning, our firm has considerable experience helping victims of elder

abuse. Our firm has aggressively pursued remedies and recovered assets belonging to our

elderly clients where unscrupulous individuals have taken advantage of the elderly because of

diminished capacity or other impairments.

8740 South Sepulveda Blvd, Ste 107

Los Angeles, CA 90045

Phone: (310) 337-7696

Website: www.schomerlawgroup.com
