Family Pot Trust – A Nursing Home Asset Protection Trust

September 14, 2017

“Family Pot Trust” is the name of a special type of trust provided to married couples who want some protection from nursing home costs.

The key benefit of a Family Pot Trust is protecting up to half of a couple’s assets from nursing home expenses and other long-term care costs after one spouse has died. The Family Pot Trust allows these assets to be passed on to children and loved ones once both spouses have died.

Family Pot Trust vs. Common Pot Trust

The Family Pot Trust should not be confused with a Common Pot Trust (a.k.a. “Pot Trust”). The Family Pot Trust operates like a Common Pot Trust, but the Family Pot Trust has additional protection to avoid exposure to nursing home costs.

Technical Description

The Family Pot Trust is prepared while both husband and wife are alive. Upon the passing of the first spouse, the Family Pot Trust arises into existence through the couple’s estate plan. The Family Pot Trust is an irrevocable trust.

Family Pot Trust FAQ

Does the Family Pot Trust provide any protection from nursing home costs prior to one spouse dying?

No. The Family Pot Trust can only provide protection after the first spouse has passed. Spouses usually care for each other while they are both alive. The Family Pot Trust is designed to provide protection once one spouse has passed.

Before a passing, is the couple’s money tied up in the Family Pot Trust?

No. The Family Pot Trust is not funded until one spouse has died, at which time up to half of the couple’s assets can be placed in the trust.

Does the Family Pot Trust protect both the husband and wife, regardless of who dies first?

Yes. The Family Pot Trust protects the surviving spouse, regardless of whether the husband or wife passed first.

Does the Family Pot Trust replace Long Term Care Insurance?

No. Long Term Care Insurance is an entirely different strategy. Couples should consider both strategies when identifying what is best for their unique circumstances.

Is the Family Pot Trust the same at all law firms?

No. “Family Pot Trust” is an internal term I have used for a special type of trust. There is no common name for this type of trust. Other law firms may use “Family Pot Trust” to describe a unique trust plan they offer, which has nothing to do with the trust that provides protection from nursing home costs.

Is the Family Pot Trust a Medicaid Protection Trust?

Yes. The Family Pot Trust provides protection from nursing home costs much like other types of Medicaid Protection Trusts. The Family Pot Trust fits into a large category of trust plans that protect assets in compliance with Medicaid / Medical Assistance law.

Is money in the Family Pot Trust subject to Medicaid’s 5-year look-back?

No. The Family Pot Trust is a type of trust that is generally exempt from the 5-year look-back associated to gifts when applying for Medicaid or Medical Assistance.

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