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Home / Medicare/Medicaid / Medicaid Law: Does a Living Trust Protect Property from Nursing Home Costs?

Medicaid Law: Does a Living Trust Protect Property from Nursing Home Costs?

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Trusts have been touted as the ideal solution for Ohio  residents looking for estate planning tools to protect assets from the catastrophic costs of long term care – but can a living trust actually protect assets under Medicaid law?

First, to review how a living trust works:

  • A living trust is a legal arrangement in which a person, called the grantor, shifts ownership of property, such as stock, a home, real estate or bank accounts, from their ownership into the legal ownership of the trust. 
  • The grantor must actually change the title of ownership of each asset that will be placed in the trust from his or her name to ownership by the trust, which is known as funding the trust.
  • A trustee manages the trust’s assets according to the terms of the trust agreement. The trustee can be the grantor, a friend or family member or a corporate entity (such as a bank, a trust attorney or trust company). As the initial trustee, the grantor can maintain full control of the trust until his or her death or incapacity. When the grantor relinquishes the trustee role, a successor trustee takes over the trustee duties. The successor trustee has legal responsibility for administering the trust solely for its named beneficiaries.

Online advertisements and aggressive sales pitches have sometimes used unscrupulous tactics to sell living trusts, even claiming that if individuals transfer property to a living trust, their assets are protected from nursing home costs.

This claim is false.  A living trust is a revocable trust, so it can be changed, revoked or modified at any time by the grantor.  This means that both the income and the property owned in the trust are considered available to cover nursing home expenses under Medicaid law.

A Medicaid attorney can best advise you on the Medicaid planning tools that can be used to meet your needs and goals, it is best not to rely on the advertisements and sales pitches.

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