Getting Ahead of the Future with Estate Planning for Medicaid

Getting Ahead of the Future with Estate Planning for Medicaid- With home prices at record highs, the equity you may have in your home might never be this high again—as is the amount of wealth at risk for nursing home care costs. A recent article from 24/7 Wall Street, “The Five Year Head Start: Families That Move the House Into the Right Trust Early Keep It From the Nursing Home Entirely,” discusses how estate-planning moves can now protect this asset.

Most families discover too late how a revocable or living trust differs from an irrevocable Medicaid Asset Protection Trust. Move the family home into the right trust early enough, and after five years, it’s no longer countable as an asset for Medicaid purposes. The type of trust and the timing are critical.

While you can’t control the timing, because we never know when a loved one or we may need nursing home care, you can control the type of trust used to protect your home.

Here’s how it works: An estate planning attorney will create a Medicaid Asset Protection Trust, an irrevocable trust with a trustee who serves as the trust's manager. The deed or title to your home must be retitled to show the trust owns the home. Your insurance company needs to be notified of the transfer of ownership. You maintain the right to remain in your home for as long as you wish. The house is still your home; it just isn’t your asset anymore. Trustee selection is one of the important decisions, as this person oversees what is likely to be your largest asset.

The equity you’re protecting has never been higher. The Case-Shiller National Home Price Index is a well-regarded index that tracks changes in single-family property prices using a repeat-sales method. Three economists created the index to serve as a barometer for the housing market and publish data every month with a two-month lag. The May 2026 index was 335.104—a record high.

For homeowners in their late 50s, 60s or early 70s who are healthy enough and think they won’t need nursing home care, now is the time to do this. It is not for someone who just got a dementia diagnosis or anyone who plans on selling their home and downsizing in the next year. It’s also not for anyone who anticipates having to borrow against the home.

However, protecting the equity in your home from a Medicaid claw back could be the smartest estate planning move you make, after making sure you have a Will, Power of Attorney, Medical Power of Attorney and Advance Directives.

The original owner is still responsible for paying property taxes, homeowner’s insurance and maintaining the home. However, once 48 months have elapsed, the house is protected from being counted as an asset for Medicaid purposes.

The most expensive mistake is confusing a revocable living trust with an irrevocable trust. A revocable trust allows you to maintain control of the assets in the trust, including changing trustees, beneficiaries and what assets are in the trust. You maintain control. However, you don’t have any protection from Medicaid.

Talk with an estate planning attorney in your community, prepare the proper documents promptly and don’t forget to follow up by retitling the home and alerting your insurance company.

Schedule your phone consultation: THE LAW OFFICES OF CLAUDE S. SMITH, III

Getting Ahead of the Future with Estate Planning for Medicaid

Reference: 24/7 Wall Street (Aug. 18, 2026) “The Five Year Head Start: Families That Move the House Into the Right Trust Early Keep It From the Nursing Home Entirely”