Does an Irrevocable Trust Protect Assets from Medicaid in Florida?

The short answer is yes—but only if you plan ahead.

When families in Northeast Florida start thinking about long-term care, one question keeps coming up: “Can I protect my home and savings from nursing home costs while still qualifying for Medicaid?”

It’s a legitimate concern. Nursing homes in Florida cost over $13,000 monthly. At that rate, most families will drain their life savings within a couple of years. Many people turn to Medicaid for help, but Florida’s strict asset limits mean you need to have almost nothing in your name to qualify.

That’s where an irrevocable trust comes in—but timing is everything.

What Makes an Irrevocable Trust Different?

Most trusts people create for estate planning are revocable living trusts. These trusts help you avoid probate and make things easier for your family after you pass away. You maintain complete control—you can change beneficiaries, add or remove assets, or cancel the trust entirely.

That flexibility is valuable. But it comes with a major limitation: revocable trusts offer zero protection from Medicaid’s asset limits.

An irrevocable trust works differently. Once you create it and transfer assets into it, you give up ownership and control. You cannot:

• Take assets back out
• Change the terms
• Cancel the trust
• Use the assets for yourself

The trustee, typically an adult child or other trusted family member, manages the trust according to the rules you established. The assets no longer belong to you legally.

And that’s exactly what makes them exempt from Medicaid’s asset calculations.

Florida’s Medicaid Asset Limit: The Problem Irrevocable Trusts Solve

To qualify for Medicaid nursing home coverage in Florida, your countable assets must be below $2,000 for a single person. Some higher-value assets don’t count—your home (under certain conditions), one vehicle, wedding rings, and personal belongings.

But bank accounts, investment accounts, second homes, rental properties, and most other assets do count.

If you’re over the limit, you have two basic options:

1. Spend down your assets until you qualify
2. Use legal planning strategies to protect assets while meeting eligibility requirements

An irrevocable trust—specifically a Medicaid Asset Protection Trust (MAPT)—falls into that second category.

The 5-Year Lookback Period: Why Timing Matters

Here’s the catch that trips up many families: Florida Medicaid has a 5-year lookback period.

When you apply for long-term care Medicaid, Florida’s Department of Children and Families reviews every financial transaction you made in the previous 60 months. They’re looking for gifts, transfers for less than fair market value, or other attempts to hide assets.

Creating an irrevocable trust counts as a transfer. You’re moving assets out of your name and into a trust where you no longer control them. Medicaid views this as giving away assets.

If you create the trust and then apply for Medicaid within five years, you’ll face a penalty period—a length of time when Medicaid won’t cover your nursing home costs, even though you meet all other requirements.

The solution? Plan ahead.

If you’re healthy and don’t anticipate needing nursing home care in the next five years, an irrevocable trust can be an effective way to protect assets. Once that five-year mark passes, the transfer no longer counts against you. The assets are protected and exempt from Medicaid’s asset limit.

How Medicaid Asset Protection Trusts Work in Florida

When you establish a Medicaid Asset Protection Trust in Florida, several things happen:

1. You transfer assets into the trust. This typically includes your home, bank accounts, investment accounts, or other property you want to protect.
2. You name a trustee. This person manages the trust. It cannot be you or your spouse—it’s usually an adult child, another family member, or a professional trustee.
3. You name beneficiaries. These are the people who will receive the assets after you pass away.
4. The trust becomes irrevocable. Once established, the terms are locked in.

Here’s what you can still do:

• Continue living in your home if it’s in the trust
• Receive income generated by trust assets (though this counts toward Medicaid’s income limits)
• Benefit from the trustee selling property and buying a replacement (for example, selling your current home and buying a different one)

Here’s what you cannot do:

• Access the principal (the actual assets)
• Change beneficiaries
• Take assets back out
• Use trust assets to pay for your care

What Assets Can Go Into an Irrevocable Trust?

Most families use irrevocable trusts to protect:

• Your primary home. You can continue living there, but the house itself belongs to the trust. When you pass away, it goes to your beneficiaries—not through probate and not subject to Medicaid estate recovery.
• Bank and investment accounts. Cash, CDs, mutual funds, stocks, and bonds can all go into the trust.
• Real estate. Rental properties, vacation homes, or land.
• Other valuable assets. Anything you want to preserve for your children or other beneficiaries.

What usually shouldn’t go into these trusts: retirement accounts like 401(k)s or IRAs. The tax implications of cashing these out and transferring them typically outweigh the benefits.

Irrevocable Trusts vs. Just Giving Assets to Your Kids

Some families wonder: “Why not just give everything to my kids now?”

Here’s why that’s usually a bad idea:

No step-up in basis.

When you give assets to your children, they inherit your original cost basis. If those assets have appreciated significantly, your children will owe capital gains tax when they sell. With a trust, assets receive a step-up in basis when you die—meaning your children can sell them tax-free.

No protection for you.

Once you give assets away, they’re gone. If your health takes an unexpected turn and you need those assets, you’re out of luck. If a trust beneficiary (like an adult child serving as trustee) needs to, they can potentially dissolve the trust and return assets to you in an emergency.

Vulnerability to your children’s creditors.

If your child gets divorced, sued, or files bankruptcy, assets you gave them could be at risk. Assets in an irrevocable trust are protected from your beneficiaries’ creditors until after your death.

The same 5-year lookback applies.

Whether you give assets directly to your kids or transfer them to a trust, Medicaid treats it as a transfer. The lookback penalty is the same either way.

What Happens to Your Home with an Irrevocable Trust?

One of the most common uses for Medicaid Asset Protection Trusts in Florida is protecting your primary residence.

Here’s how it works:

While you’re alive, you continue living in your home as usual. The title shows the trust owns the property, but you retain the right to live there.

You remain responsible for property taxes, insurance, and maintenance. You keep your homestead exemption, which provides property tax benefits and creditor protection under Florida law.

If you need to sell the house—perhaps to move closer to family or into assisted living—the trustee can sell it. The trust can then purchase a new property with the proceeds, or the funds stay in the trust.

When you pass away, the home goes directly to your beneficiaries without going through probate. And because it wasn’t in your name when you died, it’s not part of your probate estate—which means Florida’s Medicaid Estate Recovery Program cannot make a claim against it.

When Does an Irrevocable Trust Make Sense?

Not everyone needs an irrevocable trust. They work best for Florida families who:

Have assets worth protecting.

Generally, if you have less than $100,000 in assets (not counting your home), the cost of setting up and maintaining an irrevocable trust might not make sense. There are other, simpler planning strategies for smaller estates.

Can plan ahead.

Remember that 5-year lookback. If you’re already in declining health or expect to need nursing home care soon, an irrevocable trust won’t help with immediate Medicaid eligibility.

Want to leave a legacy.

The primary purpose is protecting assets for your children or other beneficiaries—not maintaining access to those assets for yourself.

Have trusted family members.

You need someone reliable to serve as a trustee. This person will have significant responsibilities and must follow the trust terms carefully.

Are in reasonably good health.

Most people who set up these trusts are in their 60s or 70s, healthy, and don’t anticipate needing nursing home care for at least five years.

What About Medicaid Estate Recovery?

Even after you qualify for Medicaid and receive coverage for nursing home care, there’s one more concern: estate recovery.

When a Florida Medicaid recipient passes away, the state attempts to recover what it spent on long-term care by making a claim against the deceased person’s probate estate.

An irrevocable trust protects against this, too. Assets in the trust don’t go through probate—they transfer directly to beneficiaries according to the trust terms. Since they’re not part of your probate estate, Florida’s Medicaid program cannot recover against them.

Your home, your savings, your legacy—all protected for your family.

Don’t Wait Until It’s Too Late

The families who struggle most with long-term care costs are those who waited too long to plan.

We see it often: someone has a sudden health crisis—a stroke, a fall, a dementia diagnosis. The family realizes nursing home care is needed soon. They start researching Medicaid and discover the 5-year lookback period.

At that point, an irrevocable trust won’t help with immediate Medicaid eligibility. There are other crisis planning strategies available, but the options are more limited and often more costly than if the family had planned ahead.

The best time to set up an irrevocable trust is while you’re healthy, thinking clearly, and have time on your side.

Getting the Right Help in Northeast Florida

Irrevocable trusts require precise legal work. The language must be exactly right, or the trust won’t provide the protection you’re counting on. A generic template or DIY approach can leave your assets vulnerable.

At Berg Bryant Elder Law Group, our Florida Board Certified Elder Law Attorneys have created hundreds of Medicaid Asset Protection Trusts for families throughout Jacksonville, Orange Park, St. Augustine, and the surrounding areas.

We don’t just create trusts—we develop comprehensive plans that protect your assets, qualify you for the benefits you need, and preserve your legacy for the people you love.

Contact us today to discuss whether an irrevocable trust makes sense for your family. Let’s talk about your goals and create a plan that actually works.

This article is for informational purposes only and does not constitute legal advice. Medicaid and trust laws change frequently, and every family’s situation is unique.