Is there a way to protect assets from being used for long term/nursing home care with a trust?

UPDATED: Oct 1, 2022

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Is there a way to protect assets from being used for long term/nursing home care with a trust?

A person with long term care insurance may run out of insurance and still need
care. Would like to preserve assets before that happens

Asked on March 30, 2019 under Estate Planning, North Carolina


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

This could have been done if done more than 5 years ago. Unfortunately, specificaly to avoid people from hiding assets from Medicaid and forcing the taxpayers to pay for their care, there is a five-year "look back" period: Medicaid can undo any transactions occuring withing 5 years of when they started paying, unless the transaction was a fair-market-value one (i.e. the person was paid the actual, fair value for whatever, like a home, was transferred), since that case, even though the person has transferred the asset, he has the money he received for it to pay for his care. But non-fair-market-value transactions are seen as fraudulent--an attempt to hide assets--if done less than 5 years before Medicaid is needed (e.g. for a nursing home), and so can be undone or voided. As a result, such relatively last minute transfers, including to a trust, do not protect assets. (Consider: if it was that easy to protect assets by putting them into a trust at the last minute, everyone would do that, no one would pay for their care costs, and the taxpayers would always foot the bill.) To use a trust to protect assets, you must use it well in advance.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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