You are referring to ways to protect property from being spent down once someone is on Medicaid. To be eligible for Medicaid in Kansas, the applicant’s assets cannot be above
$2,000. This includes all liquid and real property. (These rules are for a single person. If you Dad is married, the rules are different.) The easiest way to protect property is to “gift” it to someone else. However, at the time of Medicaid application, the case worker will “look back” 5 years to see if any gifts were made. If so, the applicant will be penalized for those gifts. The amount of the penalty is determined by dividing the total amount of gifts during the prior 5 years by the average monthly cost of nursing home care in your state. In the case of Kansas, the cost is about $4,210/mo. This calculation determines how many months Medicaid will not pay for your father’s care after his assets have been spend down to $2,000 or less. So, if you are going to make gifts to a trust, 5 years need to go by before the gifts are untouchable by Medicaid. If your father needs Medicaid in less than 5 years, a penalty will be calculated. If you use a trust, it must be an “irrevocable trust” to completely remove the property from the grantor’s ownership. A living trust does not do this. A “sale” of property is different. If the selling price is fair market value, it is not a gift. If it is less than fair market value, the difference between the selling price and fair market value is considered a gift. This is a complex subject and you should find someone to help you plan for your father’s need for care.