Can You Protect Your Assets If a Spouse Needs Nursing Home Care?

 Posted on September 19, 2026 in Asset Protection & Wealth Preservation

When your spouse needs nursing home care, the financial side of managing this issue can be almost as stressful as the medical side. Many couples in this situation have spent 40 years building savings, paying off the house, and putting money away for retirement. Suddenly, they find themselves looking at a nursing home bill that costs more than they ever could have imagined.

The good news is that Illinois Medicaid rules do not require a married couple to go broke before one spouse can receive help with long-term care. There are specific protections for the husband or wife who remains at home. There may also be additional long-term care estate planning steps you can take to protect your property.

That being said, moving money or changing ownership of large assets without understanding the Medicaid rules can make matters worse. Our Kendall County estate planning attorneys help families understand the rules before making large gifts, transferring real estate, or trying to rearrange accounts for long-term care purposes.

Does We Have to Spend Everything Before Medicaid Will Pay for Nursing Home Care?

When one spouse enters a nursing home and the other continues living at home, the spouse at home is called the community spouse. Federal and Illinois law provide special protections intended to prevent that spouse from becoming impoverished when the other spouse needs long-term care.

Illinois allows the community spouse to keep certain property outright. The home, a vehicle, and ordinary household belongings may be protected under Medicaid rules when the requirements are met. The state looks at the couple's other resources, such as cash, savings accounts, certificates of deposit, and investments.

For 2026, Illinois allows a community spouse to retain up to $143,172 in non-exempt assets under the Community Spouse Resource Allowance. Sometimes, the spouse receiving nursing home care may also retain up to $17,500 in non-exempt assets.

Get legal advice before you start spending or giving away money to try to qualify for Medicaid nursing home assistance.

Can the Community Spouse Keep the House if the Other Spouse Has Medicaid Long-Term Care?

A primary residence is treated differently from a bank or investment account when one spouse continues living in the home. Illinois specifically recognizes protections for the home of the community spouse.

There are really two different questions that need to be answered in these situations. The first is whether owning the house prevents your spouse from qualifying for Medicaid now. The second is what happens to the property later, including after one or both spouses die.

Imagine a couple owns a $450,000 house in Kendall County with no mortgage. One spouse develops dementia and eventually needs nursing home care. The other spouse stays in the house for another 15 years. The immediate Medicaid eligibility issue may be manageable because the community spouse lives there. But the couple should still think carefully about how the house is titled, who will inherit it, and whether their estate plan exposes the property to later recovery claims from Medicaid.

Can I Transfer My Spouse's Assets Into My Name to Quality for Medicaid?

Illinois allows assets to be transferred from the spouse in a nursing home to the community spouse within limits. Getting the details and timing on these transfers exactly right is extremely important for protecting your assets, especially those titled in the nursing home spouse's name. A properly planned transfer between spouses may allow more of the couple's resources to remain with you rather than staying available to pay for institutional care. Don’t handle this yourself – work with an attorney to make sure you’re giving yourself the protection you need.

Why Can Giving Money to Your Kids Cause a Medicaid Problem?

Medicaid does not allow someone to give away hundreds of thousands of dollars on Monday and apply for government-funded nursing home care on Tuesday. Illinois reviews transfers made during the 60 months before a person applies for Medicaid coverage of long-term care. If the applicant or spouse transferred property for less than fair market value during that five-year lookback period, Medicaid can impose a penalty period during which it will not pay for the applicant's long-term care.

A transfer can include more than handing someone an oversized birthday gift. Problems may arise from:

• Giving children or grandchildren substantial cash gifts
• Adding a child to ownership of property and effectively giving away part of its value
• Deeding a house to children for little or no payment
• Selling property to a relative for substantially less than its fair market value
• Moving investments into a trust without understanding how Medicaid treats the trust
• Paying relatives for years of informal caregiving without proper documentation showing that the payments were legitimate compensation rather than gifts.

Being generous without paperwork can cost you dearly when it comes to family gifts and Medicaid eligibility. For example, suppose Dad pays his daughter $2,000 per month because she has stopped working several days a week to care for him. That may be completely reasonable, but if there was no written care agreement and Dad later applies for Medicaid, the state may question whether those payments were legitimate expenses or gifts.

Illinois specifically warns that payments to family members for housing, care, or services can be treated as disqualifying transfers if the arrangement was not properly documented before the services were provided. The solution, of course, is not to stop helping family members, but to structure any caregiving arrangement correctly.

Can an Irrevocable Trust Protect Assets From Nursing Home Costs?

A properly designed irrevocable trust can be part of long-term Medicaid planning. The basic concept is that you place assets into a trust and give up enough ownership and control that those assets are no longer treated as available resources under Medicaid rules. However, that does not mean you can sign an irrevocable trust after your spouse enters a nursing home and instantly shelter your assets in that trust.

Transferring assets into an irrevocable trust may itself be treated as a transfer for Medicaid purposes. If the transfer occurs during the five-year lookback period, it can create a penalty.

Illinois Medicaid investigators have specifically reported cases in which families created irrevocable trusts to protect investments shortly before nursing home admission, only to have the transfers penalized because they occurred within the five-year lookback period. A trust is a great planning tool, but it isn’t a cure-all for avoiding Medicaid rules.

Will a Revocable Living Trust Protect My Savings From Medicaid?

A standard revocable living trust is extremely useful for many estate planning purposes. It can help manage property during incapacity, provide orderly instructions for your family, and keep certain assets out of probate.

But if you create the trust, retain the right to revoke it, and can take the assets back whenever you want, those assets ordinarily remain available to you. It helps to think about this issue from Medicaid's perspective. If you have $200,000 sitting in a revocable trust and can withdraw the entire $200,000 tomorrow, putting the words "living trust" on the account has not really removed the money from your control.

A family often needs a combination of trusts, beneficiary designations, powers of attorney, real estate planning, and long-term care planning rather than one useful but limited legal vehicle.

Is It Too Late to Protect Anything Once My Spouse Is Already in a Nursing Home?

Planning five or more years ahead usually creates more options when one spouse needs long-term care, but an unexpected or emergent nursing home admission does not mean a family has no options whatsoever.

To get a sense of what options a family has, an estate planning lawyer needs to take a look at: 

• How assets are titled
• Whether transfers between spouses should be completed
• Whether certain property is exempt
• How much the community spouse can keep
• How income should be allocated
• Whether the family has made any transfers during the previous five years that could affect Medicaid eligibility

Many people hear about great Medicaid planning strategies from friends and family, but it’s not enough to copy the actions of someone you know. What works in one situation may not work at all in another. Your family's plan should be based on your assets, your income, your health, and your values.

When Should Married Couples Start Planning for Possible Nursing Home Care?

Good planning gives you options while you still have time to make decisions. For many couples, the right time to address long-term care planning is when they are already:

• Updating their estate plan for retirement
• Selling a business
• Receiving an inheritance
• Showing signs of declining health
• Realizing that most of their wealth is tied up in a house and retirement accounts

You may decide that aggressive Medicaid planning does not make sense for you. You may decide that protecting the house is the biggest priority, or that you want to preserve an inheritance for your children while still keeping plenty of money under your own control. You may want to explore long-term care insurance or other ways to pay privately. Any of these options are completely defensible; the important thing when creating an estate plan is to understand the rules and the costs and benefits of each structure.

Call a Kendall County Estate Planning Lawyer to Help Protect Your Assets

If your spouse is already facing nursing home care, meet with a Montgomery, IL estate planning attorney right away and bring information about your checking and savings accounts, retirement accounts, investments, and life insurance. Tell your lawyer about gifts or property transfers made during the last five years.

If nursing home care is only a future concern, that is even better. You have time to build long-term care planning into your estate plan before a crisis forces you to make tough choices.

At Gateville Law Firm, our team helps families prepare for illness, incapacity, nursing home care, and the transfer of wealth to the next generation. Contact us today to schedule a Complimentary Family Wealth Planning Meeting and find out what options make sense for your family in 2026.