Long-term care can be one of the most financially devastating events a family experiences. With nursing home costs often exceeding $90,000 per year—and continuing to rise—many families find their hard-earned savings drained just to cover basic care. The good news? There’s a legal tool that can help protect your assets: the irrevocable trust.
At Generations Legal Group, we regularly help families use these trusts to plan ahead, qualify for Medicaid, and safeguard their legacy. Here's what you need to know.
What Is an Irrevocable Trust?
An irrevocable trust is a legal arrangement in which assets are transferred out of your name and into the name of a trust. Once established, the trust cannot be easily altered or revoked. Unlike revocable trusts—where the grantor retains control—an irrevocable trust creates a legal barrier between you and the assets inside it.
That loss of direct control is exactly what makes it powerful for long-term care planning.
Why Irrevocable Trusts Are So Important for Medicaid Planning
Medicaid is one of the only public programs that pays for long-term nursing home care. But to qualify, your assets must fall below strict thresholds—usually just a few thousand dollars. Without planning, many families are forced to "spend down" their life savings before Medicaid will step in.
By placing assets into an irrevocable trust:
- They are no longer counted as “available resources” for Medicaid eligibility, if the trust was created and funded more than 5 years before applying.
- You can protect your home, savings, and income-generating assets while still maintaining eligibility for care.
This means your legacy can be preserved for your spouse, children, or other beneficiaries—instead of going to a nursing home.
How the 5-Year Look-Back Rule Works
It’s important to understand Medicaid’s five-year look-back period. This rule penalizes transfers of assets made within five years before applying for Medicaid. If you transfer assets to an irrevocable trust within that window, you may be temporarily ineligible for benefits.
That’s why early planning is critical. The sooner the trust is established, the sooner that five-year clock starts ticking—and the sooner your assets are fully protected.
What Assets Can Go Into an Irrevocable Trust?
You can transfer a wide range of assets into an irrevocable trust, including:
- Your primary residence (often a key asset for protection)
- Bank accounts and CDs
- Investment accounts
- Rental or vacation properties
- Even life insurance policies
The trust can be designed to allow you to receive income generated from the trust (such as interest or dividends) while preserving the principal for your heirs.
Is an Irrevocable Trust Right for You?
Not everyone needs an irrevocable trust—but for those worried about long-term care costs and Medicaid eligibility, it can be a powerful solution. It’s especially valuable for:
- Individuals or couples over age 60 who are starting to think about aging and care
- Families with significant home equity or savings they want to pass on to children
- Those with a history of dementia, Parkinson’s, or other progressive conditions
How Generations Legal Group Can Help
Setting up an irrevocable trust is a sophisticated legal process that requires careful planning. At Generations Legal Group, we:
- Customize each trust to your unique goals and financial situation
- Help you understand the rules and avoid penalties
- Coordinate with financial advisors and tax professionals
- Provide ongoing support as your needs evolve
With decades of experience and a deep understanding of Arkansas Medicaid rules, we’ll guide you every step of the way.
Call us today at 479-601-4119 to schedule a consultation. Let’s start planning now—so your future, and your family’s future, are protected.
H. Todd Whatley, CELA*, LLM Elder Law
Owner, Generations Legal Group and The Elder Law Coach
Email: Todd@GenerationsLegalGroup.com
479-601-4119
2701 SE J St., Suite 109, Bentonville, AR 72712
Podcast for Seniors and their families.
*As certified by the National Elder Law Foundation, an ABA-approved organization for certification.
