How to protect assets from nursing homes

On Behalf of | Jun 20, 2023 | Trusts

Living in an Indiana nursing home may be expensive even for those with a sizeable nest egg. Government programs such as Medicaid may help to cover some or all of the costs associated with doing so. However, income limits and other restrictions must be met before you qualify for such a program.

Using a trust to shield assets

It is often necessary to deplete assets before you qualify for Medicaid. However, it may be possible to protect your home, car or funds in a bank account by placing them into an irrevocable trust. As you won’t serve as the trustee, you don’t have any control over the trust’s assets. Therefore, they generally won’t count when determining if you are eligible for Medicaid or other government benefits.

What to consider before making a trust

One of the key variables to consider before creating an irrevocable trust is that assets cannot be taken out of it during your lifetime. Therefore, you’ll permanently cede control of anything that is transferred into the trust’s name. It’s also important to understand that the trust must be made at least 60 months before you decide to seek Medicaid benefits. Finally, even if you qualify for Medicaid, you will still likely need to fund nursing home or other long-term care costs on your own.

Assets inside an irrevocable trust are generally shielded from creditors or government agencies because they are outside your control. However, you may want to talk with a financial adviser because there may also be several downsides to this choice.