As estate planning attorneys serving Gloucester, Rockport, Manchester by the Sea, Beverly, and all of the North Shore, we are often asked whether creating a revocable trust can shield assets from nursing home expenses. Many Massachusetts residents set up revocable trusts to avoid probate and keep their estate plans private. While these trusts can be excellent tools for estate administration, they do not provide protection from long-term care costs.

Under Massachusetts law, MassHealth (the state’s Medicaid program) counts the assets in a revocable trust as available resources when determining eligibility for nursing home benefits. This means that if you can amend, revoke, or access the assets in the trust, those assets will be treated as yours for eligibility purposes. A revocable trust does not remove the property from your financial control, so it remains subject to spend-down requirements before MassHealth coverage begins.

How Massachusetts Law Treats Revocable Trust Assets

Massachusetts General Laws Chapter 118E governs the administration of MassHealth. When reviewing an application for long-term care benefits, the program evaluates both directly owned assets and those in certain trusts. According to 130 CMR 520.023(C), any principal in a revocable trust that can be paid to or for the benefit of the applicant is considered a countable asset.

This means that if you place your home, bank accounts, or investments into a revocable trust, they will still be counted toward the $2,000 asset limit for MassHealth eligibility. The reason is simple: as long as you retain the ability to revoke the trust and reclaim the assets, they are legally considered available to you.

Why Revocable Trusts Are Still Valuable

While revocable trusts do not protect against nursing home costs, they are still a critical part of a comprehensive estate plan. They allow your chosen successor trustee to manage your assets without court involvement if you become incapacitated, and they ensure a smoother transition of property after your death by avoiding probate.

A revocable trust can also coordinate with other planning strategies, including irrevocable Medicaid trusts, to create a balance between accessibility and asset protection. The key is knowing when and how to use each tool.

Asset Protection Requires Irrevocable Planning

If the goal is to protect assets from nursing home costs, an irrevocable trust is usually the appropriate structure. In an irrevocable trust, you permanently transfer ownership of the assets to the trust, and you cannot take them back. Under 130 CMR 520.019, assets placed into an irrevocable trust are generally not countable for MassHealth eligibility purposes after the five-year look-back period has passed.

The timing is critical—transferring assets into an irrevocable trust within five years of applying for MassHealth can trigger a disqualification period. This is why advance planning is so important for anyone concerned about long-term care costs.

Working With An Attorney To Coordinate Your Plan

We regularly advise clients in Essex County who already have a revocable trust but also want to protect assets from the high cost of nursing home care. In many cases, the best solution is to maintain the revocable trust for probate avoidance and create an irrevocable trust for Medicaid planning. Each client’s needs, assets, and family circumstances are unique, so we tailor the approach to the individual situation.

Having both types of trusts, coordinated properly, can ensure that your estate plan works for incapacity, probate, and long-term care protection.

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Massachusetts Revocable Trust Frequently Asked Questions

Does A Revocable Trust Protect My Home From Nursing Home Costs In Massachusetts?
No. If your home is in a revocable trust, MassHealth will treat it as an available asset because you retain the power to revoke the trust and reclaim ownership.

What Is The Difference Between A Revocable Trust And An Irrevocable Medicaid Trust?
A revocable trust can be changed or canceled at any time and does not protect assets from MassHealth. An irrevocable Medicaid trust cannot be altered once created and, after five years, can protect assets from nursing home costs.

Can I Convert My Revocable Trust Into An Irrevocable Trust For Medicaid Planning?
In most cases, yes, but doing so is considered a new transfer of assets. This means the five-year look-back period will start from the date of conversion, potentially delaying MassHealth eligibility.

Will MassHealth Take All My Assets Before Providing Benefits?
MassHealth requires that you spend down countable assets to $2,000 or less (for an individual) before it will provide long-term care coverage. Certain assets, like a primary vehicle or some personal belongings, may be exempt.

Does Transferring My House To My Children Protect It From Nursing Home Costs?
Not immediately. Transfers within five years of applying for MassHealth can trigger a penalty period. It’s often safer to use an irrevocable trust rather than an outright transfer.

Is It Too Late To Protect Assets If I’m Already In A Nursing Home?
Options are more limited after entering a nursing home, but there may still be legal strategies to protect some assets for a spouse or other family members. Immediate legal advice is crucial.

Why Do People Still Use Revocable Trusts If They Don’t Protect Against Nursing Home Costs?
Because they provide excellent probate avoidance, privacy, and incapacity management benefits, making them a valuable part of a complete estate plan.

Does Putting My Assets In A Revocable Trust Affect My Taxes?
No. For income tax purposes, assets in a revocable trust are still treated as yours. You report income the same way as before creating the trust.

Can I Keep Both A Revocable And Irrevocable Trust?
Yes. Many people use a revocable trust for flexible estate management and an irrevocable trust for Medicaid planning, ensuring both convenience and protection.

When Should I Start Medicaid Planning In Massachusetts?
Ideally, at least five years before you anticipate needing nursing home care. This allows transfers to an irrevocable trust to fall outside the MassHealth look-back period.

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Call Troy Sullivan Firm Today For a Free Consultation

At The Sullivan Firm P.C., we help individuals and families throughout Gloucester, Rockport, Manchester by the Sea, Beverly, and across the North Shore create estate plans that work for both life and long-term care needs. If you have a revocable trust and are concerned about nursing home costs, we can guide you on how to integrate Medicaid planning into your existing strategy.

Call The Sullivan Firm P.C. Today At 978-325-2721 For A Free Consultation. Our law offices are located in Gloucester, Massachusetts, and we proudly serve clients in all of Essex County.