An act to amend Section 3605 of the Probate Code, and to amend Section 14009.5 of the Welfare and Institutions Code, relating to public social service.

The people of the State of California do enact as follows:


SECTION 1.
Section 3605 of the Probate Code is amended to read:
3605.
(a) This section applies only to a special needs trust established under Section 3604 on or after January 1, 1993.
(b) While the special needs trust is in existence, the statute of limitations otherwise applicable to claims of the State Department of Health Care Services, the State Department of State Hospitals, the State Department of Developmental Services, and any county or city and county in this state is tolled. Notwithstanding any provision in the trust instrument, at the death of the special needs trust beneficiary or on termination of the trust, the trust property is subject to claims of the State Department of Health Care Services, the State Department of State Hospitals, the State Department of Developmental Services, and any county or city and county in this state to the extent authorized by law as if the trust property is owned by the beneficiary or is part of the beneficiary’s estate.
(c) At the death of the special needs trust beneficiary or on termination of the trust, the trustee shall give notice of the beneficiary’s death or the trust termination, in the manner provided in Section 1215, to all of the following:
(1) The State Department of Health Care Services, the State Department of State Hospitals, and the State Department of Developmental Services, addressed to the director of that department at the Sacramento office of the director.
(2) Any county or city and county in this state that has made a written request to the trustee for notice, addressed to that county or city and county at the address specified in the request.
(d) Failure to give the notice required by subdivision (c) prevents the running of the statute of limitations against the claim of the department, county, or city and county not given the notice.
(e) The department, county, or city and county has four months after notice is given in which to make a claim with the trustee. If the trustee rejects the claim, the department, county, or city and county making the claim may petition the court for an order under Chapter 3 (commencing with Section 17200) of Part 5 of Division 9, directing the trustee to pay the claim. A claim made under this subdivision shall be paid as a preferred claim prior to any other distribution. If trust property is insufficient to pay all claims under this subdivision, the trustee shall petition the court for instructions and the claims shall be paid from trust property as the court deems just.
(f) If trust property is distributed before expiration of four months after notice is given without payment of the claim, the department, county, or city and county has a claim against the distributees to the full extent of the claim, or each distributee’s share of trust property, whichever is less. The claim against distributees includes interest at a rate equal to that earned in the Pooled Money Investment Account, Article 4.5 (commencing with Section 16480) of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government Code, from the date of distribution or the date of filing the claim, whichever is later, plus other accruing costs as in the case of enforcement of a money judgment.
(g) Notwithstanding subdivisions (a) to (f), inclusive, the trust property of the deceased beneficiary of a special needs trust is not subject to the claims of the state and local entities described in subdivision (b) if there is a surviving child who is a sibling of a deceased beneficiary, that surviving child is also the beneficiary of a special needs trust, and the trust of the deceased beneficiary provides for the transfer of the property in the trust of the deceased beneficiary to the special needs trust of the surviving sibling.
SEC. 2.
Section 14009.5 of the Welfare and Institutions Code is amended to read:
14009.5.
(a) Notwithstanding any other provision of this chapter, the department shall claim against the estate of the decedent, or against any recipient of the property of that decedent by distribution or survival an amount equal to the payments for the health care services received or the value of the property received by any recipient from the decedent by distribution or survival, whichever is less.
(b) The department may not claim in any of the following circumstances:
(1) The decedent was under 55 when services were received, except in the case of an individual who had been an inpatient in a nursing facility.
(2)
Where
If
there is any of the following:
(A) A surviving spouse during his or her lifetime. However, upon the death of a surviving spouse, the department shall make a claim against the estate of the surviving spouse, or against any recipient of property from the surviving spouse obtained by distribution or survival, for either the amount paid for the medical assistance given to the decedent or the value of any of the decedent’s property received by the surviving spouse through distribution or survival, whichever is less. Any statute of limitations that purports to limit the ability to recover for medical assistance granted under this chapter shall not apply to any claim made for reimbursement.
(B) A surviving child who is under age 21.
(C) A surviving child who is blind or permanently and totally disabled, within the meaning of Section 1614 of the federal Social Security Act (42
U.S.C.A.
U.S.C.
Sec. 1382c).
(D) A surviving child who is the beneficiary of a special needs trust, and who is a sibling of a deceased beneficiary of a special needs trust, if the special needs trust of the deceased beneficiary provides for the transfer of the property in the trust of the deceased beneficiary to the special needs trust of the surviving sibling.
(3) Any exemption described in paragraph (2) that restricts the department from filing a claim against a decedent’s property shall apply only to the proportionate share of the decedent’s estate or property that passes to those recipients, by survival or distribution, who qualify for an exemption under paragraph (2).
(c) (1) The department shall waive its claim, in whole or in part, if it determines that enforcement of the claim would result in substantial hardship to other dependents, heirs, or survivors of the individual against whose estate the claim exists.
(2) The department shall notify individuals of the waiver provision and the opportunity for a hearing to establish that a waiver should be granted.
(d) The following definitions shall govern the construction of this section:
(1) “Decedent” means a beneficiary who has received health care under this chapter or Chapter 8 (commencing with Section 14200) and who has died leaving property to others either through distribution or survival.
(2) “Dependents” includes, but is not limited to, immediate family or blood relatives of the decedent.

Summary: Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing federal law provides that assets in specified trusts shall not be considered for the purposes of determining an individual’s eligibility for, or amount of, benefits under Medicaid but provides that the state shall receive all amounts remaining in those trusts upon the death of the trust beneficiary. Existing state law provides that while a special needs trust, as specified, is in existence, the statute of limitations otherwise applicable to claims of the State Department of Health Care Services, the State Department of Mental Health, the State Department of Developmental Services, and any county or city and county is tolled and that the trust property is subject to those claims at the death of the special needs trust beneficiary or on termination of the trust.
This bill would exempt from the claims of those entities the trust property of a deceased beneficiary if there is a surviving child who is a sibling of the deceased beneficiary, that surviving child is also the beneficiary of a special needs trust, and the trust of the deceased beneficiary provides for the transfer of the property in the trust of the deceased beneficiary to the special needs trust of the surviving sibling.