Planning for long-term care involves the consideration of many factors. There are a number of reasons that trusts can be used as part of an individual’s long-term care plan. Sometimes an individual may place assets inside of a revocable living trust. If the individual becomes incapacitated, the trustee will have the ability to manage the trust assets immediately, and those assets can be used for the care of the individual. Revocable trusts are more commonly used as part of planning for an individual’s death to deal with issues such as probate (or multi-state probate), or privacy.

Irrevocable trusts are more commonly used in planning for an individual’s long-term care. If an individual does not have a long-term case insurance policy, they are self-insured for any long-term care needs they may have. That means it is up to the individual to pay for all of the costs associated with long-term care. Medicaid is the federally-funded, state-implemented program which pays the costs of long-term care for individuals who qualify. To qualify for Medicaid, an individual must generally have a very limited amount of assets in his or her name.

Irrevocable trusts can be used, either alone or in conjunction with other planning strategies, to reduce the amount of assets in an individual’s name for Medicaid purposes. By transferring assets into an irrevocable trust, that individual may qualify for Medicaid sooner; and at 5 years after the time of the transfer into the irrevocable trust, those assets are protected from having to be spent on long-term care. The Medicaid rules are very complex, and implementing a planning strategy using trusts should only be done with a qualified elder law attorney to avoid any potential planning failures or pitfalls.


James J. Ruggiero, Jr., Esq.
Ruggiero Law Offices, LLC
Paoli, Pennsylvania

Why Would One Use A Trust to Help Plan for Long Term Care? was last modified: April 30th, 2018 by Phil Sanders