The Best Time to Plan for Nursing Home Costs Is Before You Need To
Nursing home care in Michigan now averages over $12,000 per month — and without a plan in place, those costs can consume a lifetime of savings in a short time. I've helped
Muskegon County families protect their assets from long-term care spend-down since 1989, and the one thing I tell every client is better to have a plan and not need it than to need a plan and not have it. The families who plan early always keep the most.
The five-year Medicaid look-back rule is the single most important reason to start planning now. When you apply for Michigan Medicaid to cover nursing home costs, the state reviews every asset transfer you made in the five years before that application. Transfers made during that window — including assets placed into an irrevocable trust — can trigger a divestment penalty that delays your eligibility for benefits, sometimes by months or yearsThat means the sooner you start planning the more assets you can protect.
A revocable
living trust — the foundation of most estate plans — does not protect your assets from Medicaid spend-down. It controls how your estate is distributed after death, but Medicaid still counts those assets as yours if you become disabled. If your plan was built around a revocable trust alone, it may have a gap you don't know about yet. I'll tell you plainly whether your current plan is doing the job you think it is.
The Tools I Use to Protect Your Assets
Two instruments do the heavy lifting in proactive Medicaid planning, and I use both depending on your situation, your asset mix, and how much time we have on the five-year clock.
- Irrevocable Asset Protection Trust: Assets transferred into this trust are no longer counted as yours for Medicaid eligibility purposes. You give up direct ownership but not control of those assets This is the most powerful tool available for protecting significant wealth from nursing home spend-down.
- Ladybird Deed (Enhanced Life Estate Deed): For your home specifically, a ladybird deed allows you to transfer the property to your heirs at death while retaining full control — and the right to sell or mortgage — during your lifetime. Michigan is one of a small number of states that recognizes this deed, and it keeps your home out of the Medicaid estate recovery process without triggering a divestment penalty.
Michigan's current Medicaid asset limit for a single applicant is $9,950.00. For married couples, the community spouse resource allowance — the amount the healthy spouse is permitted to keep — is not less than $32,532.00 and up to $162,660.00 (2026 figure). It order to get the maximum allowances possible, it’s important to know how to title your assets before a care event ever starts. Knowing how to leverage the rules to your own advantage is one of the most important things I do for clients in this situation. Medicaid does not have to mean financial hardship for a spouse still living at home.
To learn more about how each of these tools works, you can read about the
irrevocable asset protection trust and the ladybird deed in detail.
Questions Families Ask About Michigan Medicaid Planning
What is the five-year look-back for Michigan Medicaid?
When you apply for Michigan Medicaid to cover nursing home costs, the state reviews asset transfers made in the five years before your application date. Transfers made during that period — including gifts to children or assets moved into an irrevocable trust — can trigger a penalty period during which you are ineligible for benefits. Knowing how to manage to lookback window determines how much you can protect no matter when you begin planning.
How much can I keep and still qualify for Medicaid in Michigan?
A single Medicaid applicant may retain up to $9,950.00 in countable assets. If you are married, your spouse — called the community spouse — may keep up to $162,660.00 in countable assets under Michigan's 2026 community spouse resource allowance. The goal of advance planning is to structure your assets so that as much as possible falls outside Medicaid's countable categories before you ever need to apply.
What assets are exempt from Medicaid in Michigan?
Certain assets are not counted toward Medicaid eligibility, including your primary home (subject to conditions), one vehicle, personal property and household goods, prepaid funeral and burial arrangements, and term life insurance with no cash value. The family home is exempt while a community spouse or dependent relative lives there, but it may be subject to Medicaid estate recovery after death unless steps — such as a ladybird deed — have been taken to remove it from your estate.
Should I give assets to my children now to protect them?
Outright gifts to children are one of the most common mistakes I see in Medicaid planning. Outright transfers expose your assets to your children's creditors, divorces, and tax consequences. An irrevocable asset protection trust accomplishes the same protective goal with far greater legal structure and without putting your assets at risk because of other factors you can’t control.
Does a revocable living trust protect my assets from nursing home costs?
No. A revocable living trust is an excellent tool for avoiding probate and managing your estate, but Medicaid counts assets held in a revocable trust as yours because you retain control over them. To shield assets from Medicaid spend-down, a separate irrevocable asset protection trust must be established and funded — ideally at least five years before you anticipate needing care. If your current plan relies only on a revocable trust, it's worth having that plan reviewed.
Start the Five-Year Clock Before You Need To
The families who come to me early have the most options.Having said that we’ve helped families protect half or more of their assets, even after a care event has already begun. . I've practiced
estate planning and
elder law in
Muskegon County for more than 35 years, and know how to protect you in advance and when there is a crisis.. A 90-minute consultation is enough time to understand where you stand, what your current plan is actually protecting, and what steps would put the five-year clock in your favor. The consultation fee is applied to your planning costs if you move forward.
