Can a protective trust be used to protect your home from long-term care expenses?
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Can a protective trust be used to protect your home from long-term care expenses?
A lawyer said that I could put my home in a protected trust so that should I need
long term care, the home is protected after 5 years. Is this correct?
Asked on August 8, 2018 under Estate Planning, Pennsylvania
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
It is generally true if by a protected trust you mean an irrevocable trust (one you cannot undo or change after the fact) with some trustee other than yourself or another family family member living in the home. (We say "generally" true because courts have enormous power to address strange, unique, etc. fact patterns, especially if some unfair or inequitable behavior is going on--it's essentially never the case that something is 100% guaranteed in all circumstances.) Of course, this means that you are taking the property out of your own ownership (the trust will own it) and control (the trust controls it, subject to instructions in the document creating the trust). While there are legal protections for you (e.g. the trustee has a "fiduciary duty" to act in your interest), you are still giving up flexibilty and control and incurring a different kind of risk (e.g. it won't benefit you if Medicaid can't get to the home if the trustee betrayed you and sold or transferred to someone else).
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