Protect the house, the farm, and the savings — before the nursing home ever comes up.
Most families find us after someone is already in a facility. We can still help them, and we do it every week.
But the families who have the most options are the ones who come in five years early. For them, the tool is a Medicaid asset protection trust, and it is one of the things our office does more of than anything else. We have set up these trusts for hundreds of Southeast Missouri families.
What it is, in plain English
You move the house, the farm, and savings you do not need to live on into an irrevocable trust. You pick who runs it, usually one of your children. You pick who gets it when you are gone.
Once five years have passed, what is in the trust does not count against you for Medicaid. If one of you needs a nursing home at 85, the farm is not the thing that pays for it.
The five-year clock
Medicaid looks back five years at anything given away. Putting assets in this kind of trust counts as a gift, so the clock starts the day the trust is funded, not the day it is signed.
That is the whole reason to do this early. If you fund it at 70 and need care at 76, the trust did its job. If you wait until the diagnosis, it is the wrong tool, and crisis planning is the right one.
What your family needs to know
Every Protection Trust client gets a one-page trust diagram. At the top are the outcomes that matter most to that family. Every family’s are different, but these four come up again and again:
- It protects assets. There is a five-year look-back, which is why we get it started now.
- No capital gains tax for the kids. We set it up so that when you pass away, your family can sell everything and pay no capital gains tax on the growth during your lifetime. It is the most generous provision in the tax code, and we use it.
- Your family is in control, not a judge. The trust stays out of probate court.
- What your children inherit can be protected. You choose whether your children inherit outright or in trust. If you choose in trust, their inheritance is protected from lawsuits, creditors, and divorce. If your son is in a car accident and gets sued, they cannot touch the land he inherited. If your daughter’s marriage goes bad, they can argue over everything else, but not what she inherited.
What you keep, and what you give up
This is not a trick, and it is not for everyone. So here is the trade.
You keep:
- Living in your home
- Filing taxes the same way. The trust uses your Social Security number.
- Control over who runs it. You can remove and replace the trustee at any time.
- The income, if you choose. Some families set the trust up so its income, like farm rent and interest, comes to them.
You give up:
- Access to the principal. You cannot take the money back out of the trust for yourself. That is what makes it work.
For that reason, we never put everything in. You keep what you need to live on, comfortably, outside the trust.
Who it fits
- You are in your 60s or 70s and in reasonable health
- You own a home, a farm, or land you want to stay in the family
- You have savings beyond what you will need to live on
- You have watched a parent or a neighbor lose everything to a nursing home, and you do not want that for your kids
Who it does not fit
- Someone likely to need care within five years. Crisis planning is built for you instead: Is it too late? →
- Someone who will need the principal to live on
- Someone whose assets are small enough that Medicaid planning is not worth the cost. We will tell you that on the first call.
Why not just put the house in the kids’ names?
Because it exposes the house to your children’s divorces, debts, and lawsuits, and it usually costs them the tax basis step-up. Putting the house in your children’s names →
What you walk out with
Every trust client leaves with one binder, organized and tabbed:
- The trust
- Your wills
- Financial and health care powers of attorney
- The new deeds, plus every reference deed behind them: the chain your children or your trustee will need, pulled and in order
When the day comes, your trustee opens the binder and everything is there. If a title company has a question, the answer is in the binder. Nobody hunts through a filing cabinet or waits on a courthouse records search while they are grieving.
People notice. Trustees who come in with a client regularly ask, before they leave, whether we can look at their own plan.
How it works, start to finish
- Initial consultation. We learn what you own and what you want.
- Your trust diagram. We send you one page showing the whole plan before you sign anything.
- Review and signing. We walk through the diagram, and you sign with witnesses present.
- We record the deed with the county. You do not have to go to the courthouse.
- Bright yellow follow-up sheets for the few things only you can do, such as making bank accounts payable on death to the trust and adding the trust to your homeowner’s insurance. You can’t miss them.
- Binder pickup in two to four weeks. We also confirm the yellow-sheet items got done.
- A check-in every three years. Usually nothing has changed in the first three years. It is at six to nine years that land gets sold or grandchildren come along.
One more thing we tell every family: if you ever go into a nursing home, we will not know unless someone calls us. About once a year we get a call from a family who waited a year or two, paying out of pocket, before calling. Tell your children to call us the week it happens.
Farm families
A farm is usually the largest thing a Southeast Missouri family owns and the thing they most want to keep together. Can Medicaid take the farm? →
Start with a free 15-minute call
We will ask what you own, what you are trying to protect, and your health picture. Then you get a straight answer about whether a trust fits, including if the answer is no.
Get Your Free 15-Minute Answer
Or call us: (573) 334-5125
This page is general information about Missouri Medicaid planning, not legal advice, and reading it does not make you a client of the Law Office of Mark McMullin. Whether a trust is right for you depends on facts specific to your family, and the rules change. No outcome is promised or implied.