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Planning Ahead for Nursing Home Costs, Asset Protection, and Special Needs

Thinking about nursing home care, Medicaid, or special needs planning can feel overwhelming, especially if this is your first time exploring estate planning.

This information is for general education only, not legal or financial advice. Please reach out to an estate planning attorney for legal guidance.

Why Nursing Home Costs Matter

Long-term care can be expensive and may significantly impact an estate over time. Because of these costs, families may need to:

  • Use savings faster than expected

  • Spend down assets before qualifying for Medicaid

  • Rethink long-term plans for loved ones

Medicaid Planning: A Simple Overview

Medicaid is a government program that can help cover long-term care costs for people who meet certain financial requirements. Eligibility rules vary by state and individual situation.

The Five-Year Lookback Rule

When someone applies for Medicaid, financial activity from the previous five years may be reviewed.

  • Gifts or asset transfers during this time may cause delays in eligibility

  • Rules are complex and vary by state, which is why professional guidance is often recommended

Common Planning Strategies People Often Learn About

These strategies are frequently discussed in estate planning education. Whether any option is appropriate depends on individual circumstances.

  • Long-term care insurance: Helps pay for care costs but requires ongoing premiums

  • Gifting assets: May reduce an estate’s value and affect Medicaid eligibility

  • Life estates: Allow someone to live in a home while transferring future ownership

  • Medicaid-compliant annuities: Convert assets into income under specific rules

Understanding Different Types of Trusts and What Trust & Will Offers

Revocable Living Trusts

✔ Offered by Trust & Will

  • Can be changed or revoked

  • Commonly used to avoid probate and organize assets

  • Not typically used for asset protection or Medicaid planning

Irrevocable Trusts

✖ Not offered by Trust & Will

  • Generally cannot be easily changed

  • Assets placed in the trust are no longer owned by the individual

  • Often discussed in advanced Medicaid or asset protection planning

Asset Protection Trusts

✖ Not offered by Trust & Will

These are always irrevocable and may include:

  • Medicaid Asset Protection Trusts (MAPTs)

  • Domestic or offshore asset protection trusts

These trusts are complex, state-specific, and need to be created with an attorney.

Special Needs Estate Planning

Special needs estate planning focuses on:

  • Providing long-term financial support

  • Preserving eligibility for public benefits like Medicaid or SSI

Special Needs Trusts

✖ Not offered by Trust & Will

  • Designed to supplement, not replace, public benefits

  • Funds can be used for quality-of-life expenses

  • Managed by a trustee for the beneficiary

When to Consider Speaking with an Attorney

Because rules vary by state and situation, legal guidance may be helpful if you:

  • Want to create an irrevocable or asset protection trust

  • Have questions about Medicaid eligibility

  • Are exploring special needs trust planning

  • Need personalized recommendations

Trust & Will can help connect you with an attorney through our referral network if needed, and our friendly Member Support team is always happy to help!

Want to Learn More?

You can explore these Learn Center articles for more helpful information:

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