How to shelter assets from nursing home care costs

Written by tammy domeier
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How to shelter assets from nursing home care costs
Protect your assets from nursing home costs. (Elderly at Leisure image by Billy from

People spend their entire lives accumulating assets. Unfortunately, if you or your spouse becomes sick and requires nursing home care, your assets will evaporate quickly. Under federal law, a nursing home resident must have limited assets to quality for federal assistance such as Medicaid. You must be proactive and protect your assets. There is a five-year "look back" rule stating that if you transfer your assets, you need to do it five years before you need nursing home care.

Skill level:


  1. 1

    Compete an inventory of all assets. Determine which ones are exempt and non-exempt from Medicaid. Generally, the nursing home resident's homestead, savings for burial expenses, automobile and up to £1,300 of personal property are exempt.

  2. 2

    Transfer assets into an irrevocable trust. An irrevocable trust allows transfer of assets to the care of a trustee. The nursing home or Medicaid cannot confiscate these assets because the nursing home resident is not the legal owner.

  3. 3

    Transfer business assets to a limited liability company. Limited liability status provides protection from creditors. An investor in an LLC can only lose the capital he or she paid into the business.

  4. 4

    Increase the value of items considered exempt from Medicaid. In most cases a homestead is considered exempt and any money spent on home improvement is not subject to nursing home costs.

  5. 5

    Invest in needed personal property for the nursing home patient. Medicaid will not penalise the nursing home resident for spending his or her assets. Invest in or upgrade the nursing home patient's automobile.

Tips and warnings

  • Unless there is a surviving spouse, after the Medicaid recipient dies, Medicaid can sell the house to recoup its expenses. If you want your children or other heirs to get the house, you might consider transferring or selling the house to the heirs and giving the surviving spouse a life estate.
  • The spouse of a nursing home resident is allowed up to about £65,000 (this amount is subject to change annually) of non-exempt assets plus the residence, burial expense reserve and automobile, plus some personal property and miscellaneous items.
  • If you transfer any assets to your family it must be for fair market price or it could be considered a fraudulent conveyance in order to defraud a potential creditor.

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