How do Medicaid home trusts work?

How do Medicaid home trusts work?

Short answer: An irrevocable trust can own the home so it is not counted for Medicaid or subject to estate recovery, but only if it was set up and funded more than five years before applying.

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

A Medicaid asset protection trust (sometimes called a home trust or income-only trust) is an irrevocable trust. The homeowner transfers the home to the trust, usually keeping the right to live there and sometimes the right to income, but giving up the right to take the home back. A trustee, often an adult child, manages it, and the home passes to the beneficiaries at death.

How it works with Medicaid:

  • The transfer is a gift for the look-back. If the person applies for Long-Term Care Medicaid within 60 months (in most states), it can cause a penalty.
  • After the look-back, the home in the trust is generally not counted and is generally not part of the estate for estate recovery.
  • A revocable trust does not work. Assets in a revocable trust are counted.
  • Trade-offs: loss of control, tax effects and the risk of needing care before the five years pass.

These trusts must be drafted by an attorney familiar with the state’s rules.

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.

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