Everyone knows long term care is terribly expensive. In fact, the average cost in Idaho is well over $8000 per month. If you can afford private pay for long term care, that should usually be your first choice because the care options under Medicaid are fairly limited. If you are in your fifties and healthy, long term care insurance might be worth investigating. But for many middle-class families, long term care is just too expensive, and for those people planning for Medicaid is important.


One important tool to consider for Medicaid planning is the Five-Year Trust. When a person applies for Medicaid for long term care, the agency will look back to any transfers made over the previous five years. Often those transfers, especially a gift or a sale for less than fair market value, will be considered suspect and could result in a costly penalty or a denial of coverage. Creation of a Five-Year Trust, if made at least five years prior to application, could protect assets in such a way that they may be left to children or grandchildren thus protecting your legacy. However, this Trust must be irrevocable and is not for everybody. The grantor will benefit from their property for life, but they will also lose control of their property, which is not reversible.


There is another significant advantage to the Five-Year Trust, which is not related to Medicaid or long-term care. It can be a useful tool in the prevention of elder financial abuse. Sadly, the incidence of exploitation of the elderly is growing. If an elderly person is losing the ability to make good financial decisions, then placing their assets in a Five-Year Trust can help prevent this insidious behavior. Naturally, careful consideration should be given to selecting a trustworthy Trustee and putting safeguards in place.

While the Five-Year Trust is worth considering as part of planning for long term care or to protect against financial abuse, an elder law attorney should be consulted as there are serious drawbacks and pitfalls. Contact McCool Law if you have any questions at 208-963-8100.