Dear Mr. Premack: Our objective is to have our nursing home care paid for by the government. We are both in our early 70’s and our estate value is just under one million dollars. We envision placing our real estate, monthly pension and social security, our money funds and our automobiles in a revocable living trust. We would require monthly withdrawals from the trust for living expenses, but would keep our checking account below $2000. If we place all of our assets in trust now, will our objective be met in five years? – FJM

Long-term care in a nursing facility can be paid for out of someone’s own money, by special long-term care insurance, or through government benefits. Some people assume that Medicare covers long-term care. It does not. Instead, the largest government program which pays for long-term care is Medicaid. People must apply for and qualify for Medicaid benefits based on income and asset limits set by the federal government.

You have given creative thought to a problem many people ignore. However, the plan you propose, however, shows just enough knowledge of the system to be dangerous.

You propose to move your assets to a revocable living trust and hope that after five years passes they will be non-countable. You already know your countable assets cannot exceed $2000, and have heard about the five-year lookback rule: if you transfer an asset and five years passes before you apply for Medicaid, there is no penalty for having disposed of the asset.

But what you are proposing will not qualify you for Medicaid, even after five years. Why? Because placing your assets into a living trust is legally construed as retaining full ownership and control of your assets. That type of trust is revocable, which means you can restore the assets to your individual ownership at any time. It also allows you unrestricted access to the assets held in the trust, and gives you full management control over the assets. The assets are still yours, have not been transferred, and still bar your way into the Medicaid program.

In fact, Medicaid regulations state that if you place your home into a living trust then the home itself disqualifies you from getting Medicaid (but if a home is not in trust, the house has protected status).

A different type of trust can accomplish your objective. If you create an irrevocable trust, put all your countable assets into the trust, give up access to the assets (retaining only an income below Medicaid’s monthly limit), give up control of the trust to an independent trustee, and wait five years before you apply for Medicaid, you might qualify if they don’t change the laws during that five years.

In the meantime, you will spend five years in relative poverty on the hope that if you someday need nursing home care it will be government supplemented. And if that day comes, you must share a room and may receive care of lower quality than you desire.

Government policy is distinctly against your plan. Instead, policy pushes you toward self-financing of your long-term care or toward buying a long-term care insurance policy.