How an Irrevocable Trust Can Protect Your Assets from Medicaid in Kansas
If you're in your 60s or 70s and thinking about what happens if you — or your spouse — eventually needs nursing home care, you've probably heard one unsettling statistic: long-term care in Kansas costs around $8,000 a month. That's nearly $100,000 a year. And Medicare won't cover it. It covers an average of only 22 days.
For most Kansas families, the only realistic safety net is Medicaid. But qualifying for Medicaid means meeting strict asset limits — and without proper planning, that can mean spending down everything you've saved before help arrives.
An irrevocable trust — when structured correctly and set up far enough in advance — is one of the most effective legal tools available to protect your home and savings from that outcome. Here's how it works, what it can and can't do, and why timing matters more than almost anything else.
What Is an Irrevocable Trust?
A trust is a legal arrangement where you transfer ownership of assets to the trust, which is then managed according to rules you set when the trust is created. A revocable trust can be changed or undone at any time — but it offers no Medicaid protection, because Medicaid still considers those assets yours.
An irrevocable trust is different. Once it's signed and funded, you generally cannot take the assets back or change the terms. That permanence is exactly what gives it legal protection — because Medicaid treats assets properly transferred into an irrevocable trust as no longer belonging to you, provided the provisions within the trust are drafted correctly. Assets placed in a properly constructed irrevocable asset protection trust are safe, but placing assets in the trust means you have given them away as far as Medicaid is concerned.
Giving anything away within five years of applying for Medicaid earns a penalty. Giving a lot away within five years of applying for Medicaid earns a lot of penalty.
That time requirement is the most important factor in making a pre-planning strategy work.
The 5-Year Look-Back Rule
Medicaid has a 5-year look-back period. When you apply for Medicaid in Kansas, the state reviews every asset transfer you made in the five years before your application date. If you transferred assets — including funding an irrevocable trust — within that window, Medicaid can impose a penalty period that delays your eligibility.
This is why irrevocable trust planning is a great strategy for people who are planning ahead. If your parent is entering a nursing home today and the trust was just created, the planning tactics utilizing that trust are very limited.
The families who benefit most from this strategy are those who act while they're still healthy — typically between ages 60 and 75 — giving the trust time to "season" past the look-back window before long-term care becomes a reality.
What Can Go Into an Irrevocable Trust?
The most common asset families place into an irrevocable Medicaid trust is the family home. For many Kansas families, the house represents their largest asset — and the one they most want to pass on to their children.
Other assets that may be appropriate to transfer include:
Savings and investment accounts
Rental or investment property
Certain other non-retirement assets
Retirement accounts (IRAs, 401(k)s) are generally not transferred into this type of trust because of the tax implications involved. An experienced elder law attorney in Kansas can help you evaluate which assets make sense to protect and which are better handled through other strategies.
Can You Still Use Your Home After Transferring It?
This is the question most families ask first — and the answer, when the trust is properly drafted, is yes.
A well-structured irrevocable Medicaid Asset Protection Trust typically allows the person who created it (called the Grantor or Trustmaker) to continue living in the home for the rest of their life. You don't have to move out. You don't lose access to the property. What changes is the legal ownership — which is what protects the home from Medicaid's asset calculations and, in many cases, from Medicaid estate recovery after death.
The details of how income, property taxes, and use rights are handled within the trust must be drafted carefully to preserve both the Medicaid protection and the tax benefits — including the stepped-up cost basis that protects your heirs from capital gains taxes when they eventually sell.
This is not a document to download from the internet or handle without experienced legal guidance. A trust that's drafted incorrectly can fail to provide the protection you're counting on — and you may not find out until it's too late to fix it.
Irrevocable Trust vs. Just Gifting Assets to Your Kids
Some families skip the trust entirely and simply transfer assets — including the house — directly to their children. This feels simpler, but it creates serious potential problems:
Medicaid look-back penalties still apply. A direct gift is treated the same as a trust transfer for look-back purposes.
You lose control. Once the house is in your child's name, it's legally theirs. If they divorce, go through bankruptcy, or have creditor problems, your home is at risk.
Capital gains exposure. Children who receive a gifted asset don't get the stepped-up cost basis they would receive if they inherited it. That can mean a significant — and avoidable — tax bill when they sell.
An irrevocable trust threads this needle. It removes the asset from your Medicaid-countable estate while preserving important legal and tax protections. For a deeper look at how trusts compare to other planning tools, see our asset protection planning page.
How Do You Know If This Strategy Is Right for You?
Irrevocable trust planning makes the most sense when:
You're in reasonably good health with no immediate need for long-term care
You have assets — particularly a home — you want to protect and pass on
You have at least five years before you anticipate needing Medicaid
You're ready to give up legal ownership of the asset (while retaining use rights) and control over the asset
If you're already in a crisis — a recent diagnosis, a nursing home placement — an irrevocable trust is likely not the right tool for right now. There are other Medicaid crisis planning strategies that may still help. The AARP's long-term care planning resources are a helpful starting point for understanding your broader options.
But if you're planning ahead, the irrevocable trust is one of the most powerful tools available — and the families who use it are almost always glad they acted when they did.
Attorney Mark Galloway holds dual LL.M. degrees in Elder Law (University of Kansas) and Tax (Boston University). He works with Kansas families across the state to build Medicaid protection strategies that preserve what they've worked their whole lives to build.
Protect your home and your legacy while there's still time to plan. Call Advanced Legal Planning at (316) 252-2233 or schedule a consultation online. Virtual meetings available.
