How Irrevocable Trusts Fit Into Florida Medicaid Planning
Estate planning in Florida often involves more than deciding who inherits assets. For many families, it also includes planning for Medicaid eligibility and long-term care without sacrificing everything they intend to pass on.
Medicaid’s strict income and asset limits make that planning especially important, particularly when significant savings or real estate are involved. These are the kinds of issues a Boca Raton estate planning lawyer regularly addresses when helping families think beyond basic wills and beneficiary designations. This is where irrevocable trusts enter the conversation.
When used strategically as part of an estate plan, an irrevocable trust can protect assets from Medicaid consideration. That protection depends on timing, structure, and compliance with Florida’s Medicaid rules. These trusts are not a last-minute fix. They are a forward-looking planning tool designed to preserve assets while maintaining future Medicaid eligibility, especially for families in Boca Raton with established estates.
Why Does Asset Protection Matter For Medicaid?
Florida Medicaid rules require applicants for long-term care coverage to have very few countable assets. In 2025, an individual can’t own more than $2,000 in countable resources, and a married couple faces a combined cap of $5,802 in monthly income. These limits apply regardless of how much a person may need care or how much they’ve already spent on it.
Some assets are exempt, such as a primary residence (with equity under certain limits), a car, and personal belongings. But savings, investments, and additional property are counted. Many families fear they’ll have to spend down every last dollar just to qualify. That’s not always the case.
When done properly and early enough, transferring assets into a Medicaid-compliant irrevocable trust can remove them from the equation entirely.
How Do Irrevocable Trusts Work Under Florida Medicaid Rules?
Unlike a revocable living trust, which leaves assets accessible to the person who created it, an irrevocable trust gives up control. Once assets are transferred into the trust, they’re no longer considered yours. That’s what makes them invisible to Medicaid, eventually.
Here’s the catch: Florida enforces a five-year lookback period. Any transfer made into an irrevocable trust within five years of applying for Medicaid can trigger a penalty period, during which the applicant is ineligible for benefits. The purpose of this rule is to discourage people from giving away assets just before filing.
This is why timing matters. A trust created just before a crisis might not help, but one set up years in advance can offer real protection.
What Assets Can You Put Into A Medicaid Asset Protection Trust?
An irrevocable trust can hold a wide range of assets, including:
- Real estate: A second home, vacation property, or investment property can be transferred into the trust. In some cases, even the primary residence may be included if done correctly.
- Savings and investments: Cash, brokerage accounts, and other financial assets can be moved into the trust.
- Life insurance policies: If the policy has cash value, it can be counted against Medicaid limits unless transferred to a trust.
- Business interests: Ownership interests in closely held businesses, professional practices, or LLCs
- Non-qualified annuities (in certain cases): Some annuities that are not Medicaid-compliant can be transferred into a trust rather than surrendered.
- Non-retirement investment accounts held jointly: Jointly owned brokerage or bank accounts can be transferred into a trust.
- Promissory notes and private loans: If the individual is owed money through a private note or loan, that right to repayment is a countable asset.
- Valuable collectibles or non-exempt personal property: Items such as art, antiques, or high-value collections that exceed ordinary personal property exemptions.
When assets are placed in a properly drafted trust, they are no longer counted toward the Medicaid eligibility threshold, provided the transfer occurred outside the five-year look-back period.
What Makes These Trusts Effective?
For an irrevocable trust to shield assets from Medicaid, it must be structured specifically for Medicaid asset protection, not just general estate planning. That means:
- You cannot serve as trustee
- You cannot have direct access to the principal
- The trust must be funded properly
- The trust must be created outside the five-year lookback period
A trust that gives the appearance of control or access may be treated as fully countable by Medicaid, defeating its purpose. And a trust created too late can lead to penalties or delays in care.
Why Do So Many Boca Raton Families Use Irrevocable Trusts?
Many Boca Raton families own homes, retirement accounts, or savings that exceed Medicaid’s limits but are not enough to cover years of nursing home or assisted living care. With long-term care costs in South Florida often exceeding $10,000 per month, that gap creates serious financial risk.
The Levy Firm, PLLC, helps clients evaluate whether irrevocable trusts and other Medicaid planning strategies can protect assets while preserving eligibility for benefits. When structured correctly and early enough, these plans can protect a spouse and preserve assets for children or other heirs.
Contact The Levy Firm, PLLC, Today
A free consultation with a member of our estate planning team is especially valuable for retirees, pre-retirees, adult children assisting aging parents, and anyone concerned about future long-term care costs. Early planning provides more options and reduces the risk of penalties or unnecessary spend-downs.
If you live in Palm Beach County or the surrounding area and want clarity around Medicaid planning, asset protection, or irrevocable trusts, contact us to schedule a free consultation. Making informed decisions now can protect what you have built over a lifetime.
"My husband and I recently completed our estate planning, including trust, wills, POA, etc. From the initial consultation to the actual signing and completion of the documents, Geoffrey and his paralegal Johana were exceptional. Geoffrey is extremely knowledgeable and took the time to explain the process, the different options we had, and answered all of our questions thoroughly, and, most importantly, very patiently. What could potentially be a stressful process, Geoffrey and Johana made it completely stress-free. I highly recommend The Levy Firm to anyone who is considering estate planning." - Mary Jo B., ⭐⭐⭐⭐⭐