Medi-Cal and Your Living Trust: The 2026 Rules

If you die a Medi-Cal beneficiary and your house and accounts are titled to your revocable living trust, the state cannot reach them to recover what it paid for your care. If those same assets are titled in your name alone, with no trust, they go through probate, and the state can and often does file a claim against that probate estate. That distinction, funded trust versus everything else, is the most concrete asset protection a living trust delivers in California right now, and it comes down to what avoids probate, not clever eligibility planning.

I want to separate two things that get lumped together constantly: protecting what you leave behind from Medi-Cal estate recovery, and qualifying for Medi-Cal in the first place. They’re governed by different rules and call for different tools, and confusing them leads people to either overpay for planning they don’t need or skip planning that would have actually protected their family. Here’s how each one works, what changed on January 1, 2026, and where the line between them sits.

What Medi-Cal estate recovery actually reaches

When Medi-Cal pays for a beneficiary’s long-term care, California has the right to seek reimbursement from that person’s estate after death. That’s estate recovery. Since a 2016 law (SB 833, codified at Welfare and Institutions Code §14009.5) took effect for deaths on or after January 1, 2017, California limits that recovery to the probate estate only. The probate estate means assets titled in the decedent’s individual name at death, with no trust and no other mechanism that passes them automatically, so a court probate proceeding is required to get them to the heirs.

Assets held in a fully funded revocable living trust are not part of the probate estate. They pass to your beneficiaries according to the trust’s terms, without a probate filing, which means Medi-Cal’s recovery claim has nothing to attach to. This is true whether you were a Medi-Cal recipient for one month or ten years, and it’s true whether you funded the trust decades before your death or shortly before it. What matters for recovery purposes is simple: was the asset titled to the trust when you died, or was it sitting in your name alone. A living trust is the tool that makes the answer to that question “the trust.”

The catch is the word “funded.” A trust is a set of instructions, not a force field. If you signed a trust ten years ago and never retitled the house or moved the brokerage account, those assets are still sitting outside the trust in your individual name. On paper you have a trust. In practice, when you die, that house goes through probate exactly as if you’d never signed anything, and it sits inside the reach of an estate recovery claim. I see this constantly with trusts that were properly drafted and then never finished. Funding is not a formality. It’s the part that does the work.

The 2026 asset test is back

Now the eligibility side, which is a separate question from recovery and changed materially this year. California eliminated the asset test for Medi-Cal on January 1, 2024, meaning applicants for programs like long-term care coverage could qualify no matter how much they owned in countable assets. That window closed. Effective January 1, 2026, California reinstated the asset limit for its non-MAGI Medi-Cal programs, which include Long-Term Care, Aged and Disabled, Share-of-Cost, and the Medicare Savings Programs. The limit is $130,000 in countable assets for an individual, plus $65,000 for each additional person in the household, which puts a couple at $195,000. This was enacted through AB 116, §59, part of the 2025-26 state health budget, and counties will require asset documentation starting at each beneficiary’s first renewal in 2026.

One wrinkle worth knowing if you or a family member receives SSI: SSI-linked Medi-Cal didn’t move. It keeps the older, separate $2,000 asset limit, which is a different and much tighter test than the $130,000 non-MAGI limit. Which limit applies to you depends on which Medi-Cal program you’re on, not just your age or diagnosis, and that’s worth confirming rather than assuming.

Eligibility and estate recovery are not the same test, and a revocable trust does not answer both

This is the point I want to be direct about, because it’s where I see the most confusion and the most expensive mistakes. A revocable living trust does not shield your assets from being counted toward the $130,000 or $195,000 Medi-Cal eligibility limit. Because you can revoke the trust and take the assets back at any time, Medi-Cal treats trust assets as available to you and counts them exactly as if they were in your own name. If you’re applying for Medi-Cal long-term care coverage and your net worth is above the threshold, moving money into a revocable trust the week before you apply doesn’t change your eligibility. It only changes what happens to those assets after you die.

So the trust does real, meaningful work, just not that work. It protects what’s left after death from being clawed back through probate. It doesn’t make you eligible for benefits you wouldn’t otherwise qualify for while you’re alive. Those are genuinely two different problems, solved by two different kinds of planning, and a lot of the anxiety I hear from clients traces back to not knowing which problem they’re actually facing.

When active eligibility planning makes sense

For some families, the eligibility side is the real problem, not the recovery side, and there are legitimate tools for it. This is planning I do at Ridley Law, and it’s worth being honest about both what it can do and what it costs you.

An irrevocable trust, properly structured, can remove assets from your countable estate for Medi-Cal eligibility purposes precisely because you give up the ability to revoke it and take the assets back. That surrendered control is the entire mechanism, and it’s not reversible on a whim. It’s not the same instrument as your revocable living trust, and it’s not a modification of one. It’s a separate decision with separate tradeoffs.

There’s also planning around assets that Medi-Cal treats as exempt rather than countable, and around the allowance that protects a healthy spouse when the other spouse needs long-term care. That allowance matters for couples. When one spouse enters long-term care and applies for Medi-Cal, the at-home spouse (the community spouse) may keep assets up to the Community Spouse Resource Allowance, which California sets at the 2026 federal maximum of $162,660, while the spouse in care is held to the $130,000 individual limit. That’s a meaningful difference from treating the couple as one $195,000 pool, and it’s one of the levers real eligibility planning works with.

None of this is something to back into casually. It makes sense for a specific set of people, usually where a long-term care need is on the horizon, assets are meaningfully above the new threshold, and there’s a healthy spouse or a specific family situation to protect. It’s not something I’d recommend for everyone with a living trust, and I’d be skeptical of anyone who tells you it is. The right move is a conversation about your numbers and timeline before any documents get drafted.

Who should review their trust titling now

A few groups of people should look at this closely in the next few months, not next year.

If you have a revocable living trust and haven’t reviewed it since you signed it, check whether everything you own is actually titled to the trust. A refinanced house, a new account, inherited property, each is a common way an asset quietly slips outside the trust and back into probate’s reach. This is exactly the kind of gap that trust administration work turns up after someone has already died, when it’s too late to fix.

If you or a spouse is currently receiving Medi-Cal, anticipates needing long-term care, or has a net worth that now sits near or above $130,000 individually or $195,000 as a couple, the 2026 asset test change is not background noise. It affects whether you qualify, and it’s worth understanding before a renewal notice arrives asking for asset documentation you weren’t expecting to provide.

If you’re an adult child managing a parent’s affairs, pull the deed and the account statements and confirm what’s actually titled to the trust versus what just says “trust” on an old estate binder somewhere. It takes an afternoon to check. It can take years and real money to fix after the fact through probate.

And if you don’t have a trust yet, this is one more reason estate recovery protection belongs in a baseline estate plan, not as something you add later. It’s one piece of a broader set of California changes taking effect this year, covered in more detail on my page on 2026 California estate law changes.

Frequently asked questions

Does a living trust protect my assets if I go on Medi-Cal?

It depends which protection you mean. A revocable living trust does not help you qualify. Those assets are still counted against the eligibility limit. What it does protect is what’s left after you die. Assets titled to a funded trust avoid probate, and Medi-Cal’s estate recovery claim only reaches the probate estate.

What is Medi-Cal estate recovery?

It’s the state’s right to seek reimbursement, after a Medi-Cal beneficiary dies, for long-term care and related costs it paid on that person’s behalf. Since Welfare and Institutions Code §14009.5 took effect for deaths on or after January 1, 2017, that recovery is limited to the beneficiary’s probate estate.

Will the state take my house if I have a trust?

If your house is titled to a fully funded revocable living trust when you die, it passes to your beneficiaries outside of probate, and Medi-Cal’s recovery claim has nothing to attach to. If the house is still in your individual name because the trust was never funded, it goes through probate and sits within reach of a recovery claim.

What changed with Medi-Cal in California in 2026?

California eliminated the Medi-Cal asset test on January 1, 2024. Effective January 1, 2026, it reinstated an asset limit for non-MAGI programs, including Long-Term Care, Aged and Disabled, Share-of-Cost, and the Medicare Savings Programs: $130,000 for an individual, plus $65,000 per additional household member, or $195,000 for a couple. Counties will require asset documentation at each beneficiary’s first renewal in 2026.

Do I need an irrevocable trust for Medi-Cal planning?

Only if the eligibility side is your actual problem, not the estate recovery side. An irrevocable trust can remove assets from what Medi-Cal counts toward the eligibility limit, but only because you give up the right to revoke it and take the assets back. It’s a separate instrument from your revocable living trust, and it isn’t the right fit for everyone. It calls for a specific conversation about your numbers and timeline.

My trust is years old. What should I check first?

Confirm that everything you currently own is actually titled to the trust, not just the assets you owned when you signed it. Real estate you refinanced, accounts you opened since, and property you inherited are the most common gaps. An unfunded asset gets no protection from estate recovery no matter what the trust document says.

Where to start

I offer a no-cost 30-minute call to walk through where your assets actually stand, whether your existing trust is properly funded, and whether eligibility planning is something your situation calls for. Reach me at (805) 244-5291.

Related reading: 2026 California estate law changes · What to do when someone dies in California · Estate planning after divorce · Estate planning in Santa Barbara County

This page is general information about California law, not legal advice for your situation, and reading it does not create an attorney-client relationship.