After her 44-year marriage ended in divorce, Carol Kuhnley attended an estate planning seminar in 2022. “I just wanted to rewrite my will,” she said. Kuhnley, 73, a retired medical technologist, got the new will plus something unexpected: an irrevocable trust. If she needed long-term care one day, she was told, Medicaid would pay, while the trust would shield her assets for her two grown daughters, one with special needs. “I had never heard of a Medicaid trust before,” she said. Instructed to move her assets into the trust, she retitled her house, then froze. “It’s intimidating,” she said. “It can’t be changed.” Her question for me: Was she doing the right thing?

First, some basics. If Medicaid is paying for your long-term care (Medicare doesn’t pay for nonmedical care), you’re limited to $2,000 worth of assets in your name, not counting certain things, such as a car or a prepaid funeral. (Spouses can retain the family home and some additional assets.) To qualify for Medicaid without spending their nest egg on care, some people put assets into an irrevocable trust. Then the assets are no longer yours; they are held for the beneficiaries you designate. Importantly, there’s also a “lookback” rule: In nearly all states, assets you put into an irrevocable trust or give away within five years of your application for Medicaid will temporarily disqualify you from the program.

To assist Kuhnley, I consulted John Midgett and Letha McDowell, experienced attorneys who practice elder law in Kuhnley’s home state of Virginia. (Regulations for implementing Medicaid are state-specific.) Some questions they addressed:

Does a trust make financial sense for Kuhnley? Maybe. Say she needs care five years from now. By one estimate, a semiprivate room in a Virginia nursing home will cost $10,700 a month. Over five years, that’s $642,000—a calculation Midgett uses to determine the usefulness of Medicaid planning. Kuhnley’s retirement accounts and her home’s value add up to more than that, so she could benefit from a trust, Midgett thinks.

What are the moral issues? “You have to be able to say, ‘I’m going to give away this money so I can qualify for a poverty-level program.’ A lot of people can’t do that,” says Midgett. “But there’s also no requirement saying you can’t take advantage of the rules as they’re written.”

What are the family dynamics? If Kuhnley’s younger daughter had control of the trust, could Kuhnley trust her not to misuse the assets? She said yes, but also noted that the relationship between that daughter and the one with special needs is fraught. She wondered if she was setting them up for future trouble.

Is this the only planning option? No, McDowell said. Kuhnley can kick the can down the road. If she moved assets into a trust at the point she needed long-term care, McDowell said, she’d spend her own money for the first five years and then qualify for Medicaid. Anything left in the trust would be protected.

One last question turned out ot be decisive: What took priority—an inheritance for her children or her own care? Kuhnley chose herself. “I should firstly be concerned about my own needs,” she said. So for now, she isn’t moving more assets to the trust. “I had these documents drawn up without asking enough questions and without understanding the answers to the questions I did ask,” Kuhnley says. You might think twice yourself before doing something similar.