The False Sense of Security
Tom and Linda did everything right. Five years ago, they hired an estate planning attorney and created a comprehensive revocable trust. They felt secure. They had documents. They had a plan.
Then Linda was diagnosed with early-onset dementia.
At the initial consultation with our office, Tom looked confused and defeated. "But we have a trust," he said. "Shouldn't our home and savings be protected?"
The answer was painful: "Your trust is excellent for probate planning and avoiding the court process. But it won't protect your assets from nursing home costs. That requires different planning—elder law planning. These are two different things."
Tom's story illustrates one of the most dangerous misconceptions we see: people believe a revocable trust protects them from long-term care costs. It doesn't.
Estate Planning ≠ Elder Law Planning
This is critical to understand: estate planning and elder law are overlapping but distinct areas of law.
Many people don't realize this. They hire an "estate planning attorney," get some documents created, and assume they're fully protected. But they're not.
Estate planning answers questions like:
- Who gets my stuff when I die?
- How do I avoid probate?
- Who manages my affairs if I'm incapacitated?
Elder law planning answers questions like:
- How do I protect my home and savings from nursing home costs?
- How do I qualify for Medicaid without losing everything?
- How do I plan for long-term care?
These are completely different questions. They require different strategies. An attorney can be excellent at estate planning but know very little about elder law. And vice versa.
Here's What a Revocable Trust Actually Does
Let's be specific about what a revocable trust protects (and what it doesn't):
A revocable trust WILL:
- Help you avoid probate when you pass away
- Allow your successor trustee to manage assets without court involvement
- Keep some financial details private
- Ensure your wishes are followed regarding asset distribution
A revocable trust WILL NOT:
- Protect your home from Medicaid spend-down
- Shield your savings from nursing home costs
- Help you qualify for Medicaid
- Protect assets from long-term care expenses while you're alive
Here's why: Medicaid looks at what you own and control. Even though assets are in a revocable trust, you can still revoke it and access the money. From Medicaid's perspective, you still own and control those assets. So they still count toward your eligibility limits.
The trust provides no protection. Medicaid will expect you to spend down your savings before you get benefits. Your home may have to be sold. Your spouse may be left with limited resources.
The Elder Law Planning That Actually Works
If a revocable trust doesn't protect you, what does?
The answer involves additional planning strategies specifically designed for long-term care protection. These include:
Irrevocable trusts structured for Medicaid planning. Unlike a revocable trust, an irrevocable trust can be designed so that Medicaid doesn't count the assets toward your eligibility limits. But these must be set up correctly and well before care is needed.
Life estate deeds and ladybird deeds that protect your home while allowing it to pass directly to your heirs. These can be powerful tools, though they come with specific risks and requirements that must be carefully considered. If you would like to discover more about why we do not recommend these, click here to read my article.
Spousal planning strategies that preserve resources for your healthy spouse even if the other spouse needs extensive long-term care. Medicaid has special protections for spouses—if you know how to use them.
Long-term care insurance (if appropriate for your situation) that can offset costs and preserve assets.
Proper asset structuring so that the right assets are positioned in the right places to maximize Medicaid eligibility and asset protection.
A Real-World Example
Let's look at two couples, both with $600,000 in savings and a $300,000 home.
Couple A: They created a revocable trust but did no elder law planning.
When the husband needed nursing home care at $10,000 per month, they had to spend down their savings before Medicaid covered anything. Within five years, their savings were gone. The wife had to spend an additional $100,000+ of her own resources because her husband depleted the shared assets. Their children inherited nothing.
Couple B: They worked with an elder law attorney and implemented proper planning (irrevocable trusts, spousal protections, and strategic asset positioning).
When the husband needed the same care, Medicaid covered it while protecting most of the couple's savings. The wife maintained her financial security. The children inherited a meaningful portion of the estate.
The difference? One couple planned. The other didn't.
When You Need Elder Law Planning
If you're between ages 60 and 82, own a home, have a net worth between $350,000 and $3 million, and live in Minnesota or Florida, this is especially important for you.
You likely have:
- A home with equity
- Retirement accounts and savings
- A spouse who depends on your resources
- Concerns about what happens if long-term care is needed
These circumstances make you a perfect candidate for comprehensive elder law planning—planning that goes beyond the basic estate plan you already have.
The time to plan is now, while you're healthy and have options. Once a health crisis hits, your choices become limited and expensive.
The Bottom Line
Your revocable trust is valuable for what it does: managing your estate when you pass away. But it's not your protection against nursing home costs. That requires additional, specialized planning.
If you created an estate plan years ago but haven't explored elder law planning, you likely have a gap in your protection. A gap that could cost your family hundreds of thousands of dollars.
Get a Professional Assessment
Don't assume your current documents are enough. Schedule a consultation with Roulet Law Firm today:
Call our Florida office at 941-909-4644 or our Minnetonka, Minnesota office at 763-420-5087 to schedule your consultation. Or fill out the contact form on this page, and a member of our team will reach out to you.
Ready to Learn More?
Download our FREE guide: "Save Our Home: How to Protect Your Home and Life Savings From Long-Term Care and Nursing Home Costs" Click here to get your copy now.
Join our exclusive masterclass: Discover the strategies we use with our private clients to help them protect their home and life savings from long-term care and nursing home costs. Sign up by clicking here reserve your spot.
