Can a home held in a protection trust be sold?

Can a home held in a protection trust be sold?

Short answer: Usually yes, by the trustee. The proceeds stay in the trust, and if the trust is drafted correctly they remain protected, but they generally cannot be paid to the person who set it up.

Figures change periodically. Double-check current amounts before relying on them.

Many Medicaid asset protection trusts allow the trustee to sell the home. Key points:

  • Proceeds stay in the trust. If the trust is properly drafted, the money remains a trust asset, not the person’s, and does not count for Medicaid.
  • Principal cannot go to the person. In most of these trusts, the person who created the trust (the grantor) cannot receive principal. If the trust lets the trustee pay principal to the grantor, the trust is counted for Medicaid.
  • Buying a new home. Some trusts allow the trustee to buy a replacement home for the grantor to live in.
  • Income. If the trust pays income to the grantor, interest on the proceeds counts as the grantor’s income.
  • Taxes. Depending on how the trust is set up, the grantor may be able to use the capital gains exclusion for a home sale. A tax professional can explain.

Before selling, the trustee should review the trust document with the attorney who drafted it.

Getting help

Every situation is different, and small facts can change the answer. If this question affects a real decision, especially with a spouse at home, a home, gifts or a trust, a Certified Medicaid Planner can apply your state’s rules to your situation. As a rough guide, published fees for help with an application range from about $500 to $6,000, and hourly help from about $150 to $600.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.

Scroll to Top