How Can I Protect My Assets from Long-Term Care Costs?


Very few people have the resources to cover nursing home costs. Many believe trusts can protect assets from long-term care costs but that was not true until recently. 

In July 2021, a ruling by the Minnesota Appellate Court, opened doors to a type of trust that could shelter your assets from long-term care costs if assets are transferred to the trust 60-months prior to applying for Medicaid.

Estate planning attorney, David Salter, owner and attorney at Salter Law LLC, recently came to the Our Lady of Peace Hospice Residence to discuss long-term care pre-planning which may prevent future crisis-planning. Pre-planning is when you’re healthy and anticipate making it through the 5-year/60-month look back period before applying for public assistance to pay for long-term care. If you missed his presentation, here is a brief overview of some common questions, with David’s answers:

Who qualifies for long-term care pre-planning?

If your estate is valued at less than $1.8 million, you may eventually have a need for Minnesota Medical Assistance (MN MA) to pay for long-term care; this is the state-run program that administers the federal Medicaid program.

What is an Irrevocable Grantor Trust? 

  • This type of trust differs from a Revocable Living Trust (RLT) in that one individual does not hold all three roles of Grantor, Trustee, and Beneficiary. 
  • Instead, the Grantor (the person who sets up the trust) will appoint trusted people, other than a spouse, for the other roles of Trustee and Beneficiary. The Grantor retains the power to change the trustees and the beneficiaries. Retaining these powers creates Grantor status for the trust. 
  • Unlike an RLT, the Grantor doesn’t have full access to the trust assets, therefore a creditor (i.e., MN MA) will not have access either; even though the assets held within this type of trust are considered part of the Grantor’s estate.

What are the upsides to an Irrevocable Grantor Trust?

  • Because the Grantor doesn’t have access to the trust assets, those assets held within this type of trust should not count as part of the MN MA spend-down requirements provided the trust was funded 60-months or more prior to the date of your MN MA application; talk with an estate planning attorney to learn how this could work in your situation.
  • The beneficiaries receive a “step-up in basis” on the assets held within an Irrevocable Grantor Trust.  So, if children inherit an asset purchased at $50,000 but worth $400,000 at the time it was inherited, they can decide to sell it and only owe capital gains for sale proceeds above $400,000.

Are there any downsides to an Irrevocable Grantor Trust?

  • During their lifetime, the Grantor loses control of the assets because they are gifting them to the Trustee of the trust. 
  • MN DHS may try to recover payments via estate recovery after the Grantor dies.
  • This is not recommended for those in estate tax territory because assets held within this type of trust are considered part of the Grantor’s estate at the time of death.

Will I need to pay estate tax at time of death? 

  1. In Minnesota, estates worth over $3 million at the time of death are subject to estate tax.
  2. This means Minnesota residents can pass up to $3 million to a non-spouse before having to pay estate tax.
  3. On the federal level, you can currently pass $12.06 million per person; in 2025, this amount sunsets (back to the prior law) down to $5-6 million per person.
  4. There is an unlimited marital deduction, allowing you to pass all assets to your spouse, without owing estate tax. However, if the surviving spouse’s estate is worth over $3 million when they pass away, they will owe Minnesota estate tax.
  5. If you are in estate tax territory, there are other estate planning strategies that should be considered; please talk to an estate planning attorney.

How will I qualify for MN MA? 

  1. To qualify for MN MA, you must:
  • Have a specific level of physical care needs; check with your county and the MN Department of Human Services (DHS) to learn more.
  • Spend your assets down to $3,000. 
  • Asset transfers made within 60-months of your application date, will be reviewed.
  • If transfers are determined to have been made to qualify for MN MA, you may be denied benefits, and a penalty period may be imposed before you can apply.

How can I pre-plan for long-term care costs if I anticipate the need for public assistance?

  • Assess which assets count vs. don’t count as part of the Minnesota Medical Assistance spend-down requirements. It’s best to talk to an estate planning/elder law attorney prior to applying to ensure all assets are assessed properly.

Should I consider creating a trust? 

There are many different types of trusts but here are some general benefits of most:

  • Avoid probate; if fully funded (titled to the name of the trust) 
  • Have terms to manage ways the asset is distributed
  • Avoid issues with Joint Tenancy and Tenants in Common: 
  • Unintended heirs
  • Subject to creditors/predators (i.e., divorce, lawsuits, MN MA)
  • Multiple probates
  • No terms on distribution or use of assets 
  • Minimize or reduce estate tax owed (i.e., a Revocable Living Trust, etc.)
  • Protect assets from long-term care (i.e., an Irrevocable Grantor Trust)

How do you want to protect your assets? What trust type is right for you and your family? Learn about how Revocable and Irrevocable trusts that can help protect your assets. Salter Law LLC can help you assess the journey ahead and provide information that can help you make the best decision. Find them at

Disclaimer: The above article should not be construed as legal advice for your situation. It is simply a recap of David Salter’s OLP presentation. Please contact an estate planning or elder law attorney to discuss the specifics of your case in order to determine which aspects of this article pertain to your life circumstances and estate planning needs.