It's a familiar story: A South Florida family watches a close relative spend years building equity in her home, only to see those assets consumed by nursing home costs in her final years. Now they wonder if putting their own home in a trust would have made a difference.
The answer depends entirely on what type of trust you use. A revocable living trust will not protect your home from Medicaid. An irrevocable trust can provide protection, but only if you transfer assets at least five years before applying for benefits. Florida families also have options that many overlook, including the state's homestead exemption and a tool called a Lady Bird Deed. Understanding how each approach works helps you make informed decisions about protecting your residence for future generations.
Why Revocable Trusts Do Not Protect Your Home from Medicaid
Many families assume that placing their home in any trust shields it from Medicaid. This is one of the most common misconceptions in estate planning.
A revocable trust allows the grantor to maintain full control over the assets inside it. You can change the terms, remove property, or dissolve the trust entirely at any time. Because you retain this control, Medicaid views those assets as still belonging to you. Think of it like moving money from your left pocket to your right pocket. The location changed, but ownership did not.
When Medicaid evaluates your eligibility, they look at what you own and control. Assets in a revocable trust meet both criteria. The trust offers no barrier between your property and the program's asset limits.
Revocable trusts serve other purposes like avoiding the Florida probate process and managing assets if you become incapacitated. They help your family skip court proceedings after your death. However, if Medicaid protection is your goal, a revocable trust is not the right tool.
How a Medicaid Asset Protection Trust Can Shield Your Home
An irrevocable trust works differently. Once you transfer assets into this type of trust, you give up ownership and control. You cannot change the terms or take the property back. A trustee you select manages everything on behalf of the beneficiaries you name.
A Medicaid Asset Protection Trust (MAPT) is specifically designed to shield assets while allowing you to qualify for long-term care benefits. Because you no longer own the property, Medicaid cannot count it against their asset limits. MAPTs offer several advantages for families who plan ahead.
- Asset exclusion. Property in the MAPT does not count toward Medicaid's asset limits because you no longer own it.
- Estate recovery protection. The state cannot pursue trust assets to recoup care costs after your death.
- Continued residence. Depending on how the MAPT is structured, you may still live in the home during your lifetime.
- Beneficiary protection. Assets pass to your named beneficiaries rather than being consumed by long-term care expenses.
The critical requirement is timing. You must transfer assets into the MAPT at least five years before applying for Medicaid. The program reviews all asset transfers during this lookback period. Moving property into an irrevocable trust within that window triggers a penalty period where you cannot receive benefits. For families who plan ahead, this exchange provides meaningful protection. For those who wait too long, the five-year requirement eliminates this option.
Florida Homestead Rules and Medicaid Eligibility
Florida offers protections that residents of other states do not have. Your primary residence is generally exempt from Medicaid's asset calculations while you are alive. Florida's 2025 Medicaid eligibility rules set the asset limit at $2,000 for single applicants, with homestead equity protected up to $730,000. Understanding what these protections cover helps you plan more effectively.
- Primary residence exemption. Your home typically will not disqualify you from Medicaid as long as you live there or intend to return after a nursing facility stay.
- Spousal protections. Under Florida's homestead descent laws, a surviving spouse receives either a life estate or can elect to take half interest as a tenant in common.
- Living spouse security. When one spouse needs long-term care, the family home stays protected for the spouse still living there.
- Equity limits. Single applicants receive protection for home equity up to $730,000 under current rules.
The concern shifts to what happens after death. Florida's Medicaid Estate Recovery Program allows the state to seek reimbursement from your estate for benefits paid during your lifetime. Without proper planning, the home you protected during life becomes vulnerable once you pass. Your heirs may face claims against the property before they can inherit it.
Lady Bird Deeds as a Florida Asset Protection Alternative
Florida recognizes a planning tool that most states do not. A Lady Bird deed allows Florida homeowners to transfer property at death while retaining full control during their lifetime.
This enhanced life estate deed names beneficiaries who will receive your home when you die. Unlike a standard life estate, you keep the right to sell the property, take out a mortgage, or change the beneficiaries at any time. You maintain complete control until your death.
Lady Bird deeds do not trigger the Medicaid lookback period because you retain ownership while alive. This approach helps families avoid the probate process while maintaining flexibility. The property passes directly to your named beneficiaries outside of court proceedings.
However, Lady Bird deeds are not complete Medicaid protection on their own. Whether they shield your home from estate recovery depends on specific circumstances and how Florida interprets the transfer. They work best as part of a broader estate planning strategy rather than a standalone solution.
What If You Need Care Before the Five Years Is Up
Many families do not start planning until a health crisis forces the conversation. If you have already transferred assets within the lookback window, options still exist.
Florida enforces a 60-month Medicaid lookback period that reviews all asset transfers made before your application date. Transfers within this window can result in a penalty period calculated based on the value of assets moved.
Here's a situation that plays out across South Florida every day: A family transferred a home worth $300,000 three years before applying for Medicaid. They now face a penalty period delaying their eligibility. The exact length depends on Florida's penalty divisor and other factors specific to their situation.
Certain transfers are exempt from penalties. These include transfers to a spouse, to a disabled child, or to a caretaker child who lived in the home and provided care for at least two years before the parent entered a facility. Working with an asset protection attorney helps families evaluate crisis planning options based on their specific circumstances.
Why Transferring Your Home Directly to Children Can Backfire
Some families skip trusts entirely and transfer the deed directly to their children. This approach creates serious risks that often outweigh any perceived benefits.
Direct transfers still trigger the five-year lookback period. You gain no timing advantage over using a MAPT. Meanwhile, you expose the property to your children's financial problems. Their divorce, creditors, lawsuits, or bankruptcy could put your home at risk.
Tax consequences also matter. When children inherit property, they receive a stepped-up tax basis equal to the home's value at your death. When you gift property during life, they inherit your original basis. This difference can mean tens of thousands of dollars in capital gains taxes when they eventually sell.
You also lose your legal right to live in the home. Consider a parent who transfers their home to one child expecting to continue living there. Years later, that child faces financial difficulties and needs to sell. The parent has no legal protection against being displaced. Proper planning helps protect inheritance for all family members while avoiding potential conflicts.
Protecting Your Florida Home Requires the Right Medicaid Planning Strategy
Revocable trusts do not protect your home from Medicaid. A properly structured MAPT can provide protection, but requires giving up control and planning at least five years ahead. Florida's homestead exemption protects your residence during life, while Lady Bird deeds offer a flexible alternative for transferring property at death.
Every family's situation differs. Your health, timeline, family dynamics, and financial goals all influence which strategies make sense. Starting the conversation early creates more options and better outcomes.
Contact our Fort Lauderdale estate planning team to discuss which strategies fit your family's needs. We offer free consultations to help you understand your options and create a plan that protects what matters most.
