You've done everything right. You hired an attorney. You created a will or trust. You think your family is protected. But when nursing home care becomes necessary, you discover a harsh truth: your estate plan likely won't protect a single dollar of your life savings.
I've been practicing estate and elder law for nearly 30 years, and I've seen this story play out hundreds of times. Good people who planned ahead discover too late that their will or revocable living trust does little to protect their home and savings from long-term care and nursing home costs.
Here's what you need to know to avoid making the same costly mistakes.
The Reality Nobody Wants to Talk About
According to the U.S. Department of Health and Human Services, over 70% of adults over age 65 will need some form of long-term care. That means home health aides, assisted living, or nursing home care. This isn't a small possibility. It's more likely to happen than not.
Yet most people convince themselves it won't happen to them. They see themselves as healthy and active. They can't imagine needing help with daily tasks like bathing, dressing, or taking medication.
But a stroke can change everything overnight. Alzheimer's doesn't care how active you are today. A fall, a diagnosis, a slow decline—any of these can create a need for care that lasts months or years.
The Financial Reality of Long-Term Care in Minnesota
Let's talk about what this care actually costs. According to Genworth Financial, one of the nation's largest long-term care insurance providers, here's what Minnesotans paid for care in 2024:
- Home health aide: Over $96,000 per year
- Assisted living: Over $74,000 per year
- Shared nursing home room: Over $146,000 per year
Here's the scary part: These costs are rising much faster than inflation. From 2023 to 2024 alone:
- Home health aide costs jumped 24%
- Assisted living increased 17%
- Nursing home costs rose 18%
At $146,000 per year for a nursing home, you're spending over $12,000 every single month. A typical nursing home stay lasts 2.5 years. That's $365,000—and that's just for one spouse.
Even if you have a million-dollar nest egg, nursing home care can wipe it out and leave your healthy spouse with nothing.
Dangerous Assumptions That Cost Families Everything
Over my three decades of practice, I've heard the same false assumptions over and over. Let me address the most common ones:
"It Won't Happen to Me"
This is the most dangerous assumption of all. Remember that statistic: 70% of people over 65 need long-term care. You might be healthy today, but the odds say you or your spouse will likely need care at some point.
Planning for long-term care isn't being negative. It's being realistic and responsible to your family.
"Medicare Will Cover It"
This might be the most widespread and costly misunderstanding in America.
Medicare does NOT pay for long-term care. Let me say that again: Medicare does not cover nursing home care, assisted living, or ongoing home health care.
Medicare will cover up to 100 days in a skilled nursing facility after a hospital stay of at least three days—and only if you need skilled nursing or therapy. After 20 days, you pay a copay. After 100 days, Medicare pays nothing.
But most nursing home residents don't need "skilled" care. They need help with daily living—bathing, dressing, eating, using the bathroom. That's called "custodial care," and Medicare doesn't cover one penny of it.
"I Have a Will (or Trust), So I'm Protected"
This is where good people who did the right thing get blindsided.
Your will doesn't protect anything while you're alive. It only controls what happens after you die. If you need nursing home care, your will sits in a drawer doing nothing while you spend down every asset you own.
What about a revocable living trust? Surely that protects your assets, right?
Wrong. A revocable living trust is a wonderful tool for avoiding probate and managing assets if you become incapacitated. I create them for clients all the time. But when it comes to protecting assets from nursing home costs, a revocable trust does nothing.
Why? Because you still own and control everything in that trust. You can take money out anytime you want. You can change the terms. You can dissolve the whole thing tomorrow.
And if you can access those assets, so can the state and the nursing home. Medicaid sees right through a revocable trust. Your home, your savings, your investments—it's all available to pay for your care.
"They Can't Take My House"
Many people believe their home is automatically protected. It's not.
While you're living in your home, Medicaid generally won't force you to sell it to pay for care. But here's what they don't tell you:
After you die, the State and Medicaid can place a claim against your home to recover every dollar they paid for your care. This is called "estate recovery." Your children inherit the house with a massive lien on it. They often have to sell the family home just to pay back Medicaid.
And if you're married and your spouse needs nursing home care? The healthy spouse gets to stay in the home while the other spouse is in care. But after the first spouse dies, estate recovery comes for that house.
"I'll Just Give Everything to My Kids" or "I'll Sell It to Them for $1"
This is where people get into serious trouble.
Medicaid has a five-year "look-back period." When you apply for Medicaid to cover nursing home care, they examine every financial transaction you made in the previous five years.
If you gave away your house, your savings, or other assets during that time—even to your own children—Medicaid will penalize you. They calculate how many months of care that gift could have paid for, and they make you wait that many months before Medicaid will pay anything.
During that penalty period, you're in the worst possible situation: You've given away your money, so you can't pay for care. But Medicaid won't pay either. Your family is left scrambling to cover costs that can exceed $12,000 per month.
And selling your house to your kids for $1? Medicaid treats that exactly like a gift. The difference between the fair market value and what you received ($1) becomes a penalty.
Understanding Medicare vs. Medicaid: Two Completely Different Programs
The confusion between Medicare and Medicaid costs families billions of dollars every year. Here's the simple truth:
Medicare is health insurance for people 65 and older (and some younger people with disabilities). It covers doctor visits, hospital stays, surgery, and short-term skilled nursing care. It does NOT cover long-term care.
Medicaid is a need-based program for people with limited income and assets. It WILL cover long-term nursing home care—but only after you've spent almost everything you own.
In Minnesota, to qualify for Medicaid nursing home coverage in 2025, a single person can keep only about $3,000 in countable assets. Everything above that must be spent on care before Medicaid pays a dime.
For married couples, the rules are slightly better but still devastating. The healthy spouse (called the "community spouse") can keep roughly $154,140 in assets and the house. Everything else goes to pay for care.
If you saved $800,000 for retirement, you could lose over $645,000 to nursing home costs before Medicaid helps.
A Real-World Example: The Johnson Family
Let me show you how this plays out in real life. (I've changed the names, but this is based on a real Minnesota family.)
Tom and Mary Johnson, both 76, live in Minnetonka. They've been married for 52 years. They own their home worth $450,000 with no mortgage. They have $600,000 in savings and investments. Their estate plan includes a will and a revocable living trust created by a reputable attorney ten years ago.
They thought they were prepared.
Then Tom has a major stroke. After two weeks in the hospital and 30 days in rehab, it's clear he can't return home. He needs 24-hour care in a nursing home. The cost: $146,000 per year.
Year 1: Tom enters the nursing home. They pay $146,000 from their savings. Their $600,000 drops to $454,000. Mary lives on Social Security and pulls another $30,000 from savings for living expenses. They're now at $424,000.
Year 2: Costs rise to $155,000 (remember, these costs are increasing 15-20% per year). Another $30,000 for Mary's living expenses. They're down to $239,000.
Year 3: Now at $165,000 per year for Tom's care plus Mary's $30,000. They're down to $44,000. They finally qualify for Medicaid because they've burned through nearly everything.
Mary gets to keep their home and about $154,140 in assets. But of their original $600,000 in savings, they've lost over $445,000. And when Tom eventually passes away, Medicaid will file a claim against the house to recover what they paid for his care.
The family home Mary lived in for 40 years—the home where she raised her children—now has a lien on it. When Mary dies, the kids inherit a house they'll likely have to sell to pay Medicaid back.
All because Tom and Mary had a traditional estate plan instead of an elder law plan.
What Proper Elder Law Planning Does Instead
Here's the good news: with proper planning, much of this can be prevented.
Elder law planning uses specialized legal tools that traditional estate planning attorneys often don't know about or don't use. These strategies are 100% legal and have been approved by federal law, the courts and Medicaid agencies across the country.
Proper elder law planning can help you:
- Protect your home from Medicaid estate recovery so your children can inherit it
- Shield significant assets from nursing home spend-down requirements
- Preserve more for the healthy spouse than Medicaid rules normally allow
- Create income streams that don't count against Medicaid eligibility
- Reduce or eliminate penalty periods even if you've already made gifts
The specific strategies depend on your situation: your ages, health, assets, family structure, and goals. There's no one-size-fits-all approach. That's why working with an experienced elder law attorney is crucial.
Some strategies work best if implemented years before you need care. Others can help even if you're already in a nursing home or facing an immediate crisis.
But here's what I can tell you after 30 years of experience: Doing nothing is the most expensive option. Every family I've helped wishes they had planned sooner. I've never had a single client tell me they regret protecting their assets.
The Cost of Waiting
I understand the temptation to put this off. Nobody wants to think about needing nursing home care. The planning process requires having difficult conversations and facing uncomfortable realities.
But consider this: The cost of proper elder law planning is approximately the same as one month of the costs of a nursing home. The cost of NOT planning is often hundreds of thousands of dollars.
Which would you rather explain to your spouse and children?
Remember, 70% of people over 65 will need some form of long-term care. The question isn't whether to plan. The question is whether you'll plan in time to protect what you've spent a lifetime building.
Call us today to schedule a consultation to discuss your own planning at either (763) 420-5087 for our Minnetonka, MN office or at (941) 909-4644 for our Florida office. Or you can fill out the contact form on this page and a member of our team will reach out to schedule your consultation.
If you would like to discover more, here are two additional resources for you:
Download your copy of my guide, "Save Our Home: How to Protect Your Home and Life Savings From Long-Term Care and Nursing Home Costs". Click here to download your copy.
Join us in my upcoming exclusive masterclass where I reveal strategies I use with my private clients to help them protect their home and savings from nursing home costs. Click here to sing up.
