Louisiana Medicaid Trust Guide

Why not just give it to the kids?

You can, but then it is theirs. If a child divorces, gets sued, goes bankrupt, or dies before you, your home could be lost. A child could also sell it or borrow against it. The trust keeps the property out of your children's personal names and under a written set of rules, while still keeping it out of your name for Medicaid.

We meet and plan. We go over what you own, what income you receive each month, your health, and your family. We decide together what goes into the trust and what stays out. We also confirm that this is the right tool for you. It is not right for everyone.

We draft the trust. The trust is a written document, usually 20 to 30 pages. It names your trustee, names your beneficiaries, and spells out what the trustee may and may not do. The key rule: the trustee can never pay principal (the property itself) back to you. That single rule is what keeps the property from counting.

You sign. You sign the trust in front of a notary. Your trustee signs to accept the job.

We fund the trust. This is the most important step. We prepare and record a new deed moving your home into the trust. We help you retitle bank accounts, CDs, and investment accounts into the trust's name. We get the trust its own tax ID number. Property that is never retitled is never protected.

The five-year clock starts. The clock starts on the day each item is moved into the trust. If you add property later, that later property gets its own five-year clock. That is why we move everything in at once.

Life goes on. You live in your home. You receive your income. The trustee keeps records and files a simple tax return for the trust each year.

If care is needed later. After five years, we help you or your family apply for Medicaid. The trust property is not reported as yours, and Medicaid pays for care once your own remaining assets are spent down. If care is needed before five years, we calculate the exact wait and plan around it.

After your death. The trustee distributes the property to your children or other beneficiaries you named, without a succession proceeding in court.

Your home

You keep living in it. The trust gives you the legal right to live there for the rest of your life. Nobody can sell it out from under you or make you leave. You keep paying the utilities and ordinary upkeep as you always have. If the home is later sold, the money goes into the trust, and the trust can buy you another place to live.

Your income

Your Social Security, pension, and retirement account payments are yours. They are not placed in the trust and they keep coming to you every month, just as before. If the trust holds savings that earn interest, we can set up the trust so that interest is paid to you as well.

Your everyday money

You keep a checking account and a cushion of savings in your own name. Medicaid allows a single person to keep $2,000 in countable assets, but there is no reason to run yourself down to that number now. Most clients keep enough outside the trust to cover a year or two of ordinary expenses and emergencies. We help you pick that number.

Your bills

You pay your own bills from your own income and your own accounts, as always. The trustee pays the trust's bills (property tax, homeowner's insurance, a new roof) from trust funds, if the trust holds cash for that purpose.

Your car, furniture, and personal things

These stay in your name. Medicaid does not count one vehicle or your household goods.

A real-life picture

Mrs. Smith is 72 and healthy. She owns her home ($209,000) and has $150,000 in CDs. She receives $2,100 a month from Social Security and a pension. She keeps $40,000 in her own savings and checking. She moves the house and $110,000 into a Medicaid trust naming her daughter as trustee. Nothing about her routine changes: same house, same monthly income, same checking account. Five years later, if she needs nursing-home care, the house and the $110,000 (plus growth) are not counted. She spends down her own $40,000, then Medicaid pays. Her daughter, following the trust, eventually distributes the house and savings to Mrs. Smith's children.

Medical need. A nurse or case manager assesses whether you need nursing-facility level of care: substantial help with bathing, dressing, eating, or moving, or supervision because of memory loss.

Income. Your gross monthly income, before anything is withheld, must be under $2,982 (2026), or you must qualify another way (see Qualified Income Trusts).

Resources. Your countable resources must be at or below $2,000 for a single person. Married couples keep more under the spousal rules.

The look-back. Medicaid reviews five years of records. Gifts in that time create a waiting period.

Mrs. Smith's income is $2,100 a month. Once she qualifies, she keeps her $40 allowance and pays the rest, less her Medicare premium, to the nursing home. Medicaid pays the balance of the bill.

Retirement accounts cannot go into a Medicaid trust without triggering income tax on the whole balance, so we plan for them separately. First we check whether the plan offers monthly payments. If it does not, an immediate annuity bought inside an IRA, with the State named as remainder beneficiary, turns the balance into income. For a married couple, this can turn the at-home spouse's account into income for that spouse, which is not counted against the applicant. Small balances are often simply spent down.

In Louisiana, it is usually not needed. Applicants with income over $2,982 a month can qualify through Louisiana's medically needy spend-down, as long as their income is less than the cost of their nursing-home care. We explain these trusts because clients often hear about them, and because the rules differ in other states.

Set up the trust. A short irrevocable trust and a separate bank account are created. You, or your agent under a power of attorney, sign it and name a trustee, usually a family member.

Deposit income every month. Income over the limit, often an entire source such as a pension check, is deposited into the trust account each month. Medicaid no longer counts that income for eligibility.

The trustee pays it out. Each month the trustee pays the personal needs allowance, any allowance owed to the at-home spouse, and the rest to the nursing home as your share of cost.

At death. Anything left in the account goes to the State, up to the amount Medicaid paid for your care.

Mr. Jones receives $2,400 a month from Social Security and $900 from a pension: $3,300, which is $318 over the limit. His pension is deposited into a Qualified Income Trust each month, so his countable income is $2,400 and he qualifies. The trust pays the $900 to the nursing home, along with most of his Social Security.

What if I need a nursing home before five years are up?

The trust still works; it just works later. Medicaid will make you wait a number of months equal to the value you moved into the trust divided by about $7,200. During the wait, care is paid from your remaining assets, your income, family help, or the trust distributing to your children who then help you. We calculate the exact wait and plan for it before you sign. In many cases the wait ends up shorter than the five years you would have faced anyway.

Can I ever get the property back?

No. That is the one rule that cannot bend. If there were any way for the property to come back to you, Medicaid would count all of it. Your children can choose to help you with their own money, including money the trust distributes to them, but the trust cannot pay you directly.

Will I lose my homestead exemption on my property taxes?

In most cases, no, as long as the trust is recorded and you keep living in the home. Louisiana allows the homestead exemption on a home held in trust when the person living there qualifies. We record the deed and file the paperwork with the parish assessor.

Do I still pay taxes on the trust's income?

Usually yes, on your own return, because the trust is set up as a "grantor trust" for income-tax purposes. That is deliberate. It keeps things simple and preserves an important tax break: when you die, your children receive the property with a stepped-up basis, meaning the capital-gains tax on years of growth is erased.

What if I want to sell the house and move?

The trustee sells it. The sale money stays in the trust. The trust can then buy a new home for you to live in, or a smaller one, or a condo near your children.

What if my trustee dies or moves away?

We name a backup trustee in the document. If all named trustees are gone, the trust protector or the beneficiaries can appoint a new one.

What if the law changes?

The federal five-year rule has been in place since 2006. Louisiana updates its dollar figures regularly. We build in a trust protector who can make technical changes to keep the trust working, without giving you any power over the property.

Is this legal? Is it hiding assets?

It is legal and it is not hiding anything. When you apply for Medicaid, the trust is disclosed. Federal law itself spells out how trusts are treated and sets the five-year look-back. The trust simply follows those rules.

Can Medicaid come after my home when I die?

Louisiana's estate recovery program collects from a deceased Medicaid recipient's estate. Property properly placed in the trust is no longer yours, so it is generally outside the estate the State can reach. Property still in your own name at death can be.

Does this protect against a lawsuit or creditors?

It offers some protection, because the property is no longer yours and your children do not own it outright either. It is not designed as a lawsuit shield, and it should never be set up when a lawsuit or claim is already pending or expected.

What about my spouse?

Married couples get more room under Medicaid's spousal rules, and the at-home spouse is allowed to keep a set amount of assets and income. A trust is still often the right move for a couple, but the design is different. We go over the spousal rules at your meeting.

I'm a veteran. Does this affect my VA benefits?

Yes. The VA has its own three-year look-back for pension benefits with Aid and Attendance. Moving assets into the trust starts that clock too. Tell us about any military service so we can plan for both programs.

How much does it cost, and how long does it take?

Our Medicaid trust package is a flat fee of $4,400 for a single person or $4,900 for a married couple.* It includes the planning meeting, the trust, the deed, help retitling accounts, the trust's tax ID, and a meeting with your trustee. Most plans are signed within four to six weeks of the planning meeting, and funding is finished within a few weeks after that.

Am I too young or too old for this?

The best time is while you are healthy and at least five years away from needing care. Most of our clients are between 62 and 78. If you are older or already have a serious diagnosis, the trust may still help, but the math is different, and we will show you the numbers before you decide.

I already have a revocable living trust. Isn't that enough?

No. A revocable trust can be changed or canceled, so Medicaid counts everything in it. Worse, a home placed in a revocable trust loses its Medicaid protection once you enter a facility, while a home in your own name keeps it. We often convert clients from a revocable trust to a Medicaid trust, and the two can work side by side.

What happens to my IRA or 401(k)?

Retirement accounts stay in your name. Moving them into a trust would trigger income tax on the whole balance. Louisiana counts IRAs, and most 401(k)s once you leave the job, so we plan for them separately, often by applying for the plan's monthly payments, buying an annuity inside an IRA, or spending them first. We go over this at your meeting.

Can the trust pay for repairs on my house?

Yes, if the trust holds cash for that purpose. Property taxes, homeowner's insurance, a new roof, or a new air conditioner can all be paid by the trustee from trust funds, because those payments protect the trust's property, not you personally.

Can my children live in the house with me? Can they rent it out later?

Yes to both. The trust can allow family members to live there. If you move to assisted living, the trustee can rent the home and keep the rent in the trust, or pay it to you as income if the trust is set up that way.

Will my children owe taxes when they inherit?

Usually very little. Because the trust is designed so the property is still in your estate for tax purposes, your children receive it with a "stepped-up basis." If your home was bought for $60,000 and is worth $250,000 when you die, that $190,000 of gain is wiped out. If you had simply deeded the house to your children now, they would owe capital-gains tax on that gain when they sell.

Is there a gift tax when I fund the trust?

Funding the trust is a gift for federal gift-tax purposes, and a gift-tax return may need to be filed. For nearly everyone, no tax is owed, because the federal lifetime exemption is many millions of dollars. Louisiana has no gift or inheritance tax.

What if one of my children is on disability or has special needs?

We can build a special needs share into the trust so that child's inheritance does not cost them their benefits. A gift to a special needs trust for a disabled person under 65 is also exempt from Medicaid's five-year rule.

What if I get sick and cannot manage things during the five years?

Your income and your own accounts are handled by the agent under your power of attorney, which is part of your plan. The trust property is handled by your trustee. Nothing stalls because you are unwell.

Can I keep my life insurance?

Term insurance has no cash value and is not counted. Whole-life or universal policies are excluded if their total face value is $10,000 or less. Above that, the full cash value counts, and we usually move ownership into the trust or use the policy another way.

Does the trust cover assisted living or home care?

Medicaid in Louisiana pays for nursing-facility care and for certain home- and community-based waiver programs, and the trust helps you qualify for those. It does not pay for private assisted living, which is generally private pay. The trust can still protect your assets while you pay for assisted living from income and your own funds.

Will my trustee get paid?

A family member usually serves without pay. The trust can allow a reasonable fee if you want one, and a bank trustee will charge a yearly fee based on the assets.

Can I do this on my own with an online form?

We do not recommend it. One wrong sentence, such as a trustee power to use principal "for the grantor's benefit," makes the entire trust countable, and the mistake is usually discovered when Medicaid denies the application. Every trust we draft is built to Louisiana's rules as written and is reviewed with your trustee before signing.

What is the biggest mistake people make?

Waiting. Every month you wait is a month added to the end of the five-year clock. The second biggest mistake is signing the trust and never retitling the house or the accounts. We do not consider a plan finished until the deed is recorded and every account is retitled.

A real lawyer, start to finish. Our lead attorney has practiced for more than twenty years and personally reviews every trust.

One flat fee. The Medicaid trust package is $4,400 for a single person or $4,900 for a married couple.* That includes planning, drafting, the deed, help retitling every account, the trust's tax ID, and a meeting with your trustee. No hourly bills.

Plain English. You will understand every page before you sign. If you cannot explain it to your children, we have not finished our job.

Fast without rushing. Most plans are signed within four to six weeks of the planning meeting.

A partner for life. When the law or your family changes, we are still here. Every client gets a free review meeting every three years.

Ready to protect your home?

Call (844) 544-PLAN or visit trustedplanlawyers.com to schedule a planning meeting.

Gather your information. Deeds, the most recent statement for each bank and investment account, life insurance policies, and a list of your monthly income sources. We will send you a one-page checklist.

Think about your trustee. Who is organized, honest, and likely to be around? Who is your backup?

Think about your cushion. How much do you want to keep in your own name for comfort and emergencies?

Come to your planning meeting. We will walk through everything in this guide with your own numbers, answer your questions, and tell you plainly whether this trust is the right fit.

This guide is general information for our clients. It is not legal advice for your specific situation until we have met and reviewed your facts. Dollar figures are those published by the Louisiana Department of Health and the federal Centers for Medicare & Medicaid Services for 2026, and they change from time to time.