Medicaid Protection Trust: Protect Assets from Nursing Home & Long Term Care

Update: Minnesota’s Trust-Busting Statute Was Held Preempted (2021) and Repealed (2022)

Reviewed and current as of September 12, 2026.

In Geyen v. Commissioner of Minnesota Department of Human Services, 964 N.W.2d 639 (Minn. App. 2021), a published opinion filed July 12, 2021 (No. A20-1300, Cochran, J.), the Minnesota Court of Appeals held that paragraph (b) of Minn. Stat. § 501C.1206, which deemed certain irrevocable trusts revocable “for the sole purpose” of a medical assistance long-term care eligibility determination, “is preempted by federal law.” The Legislature then repealed that section outright in 2022 Minn. Laws ch. 98, art. 2, § 16, effective June 3, 2022. The revisor’s page for the section now carries a single line: “501C.1206 MS 2020 [Repealed, 2022 c 98 art 2 s 16].”

Two points keep that update from being read too broadly. The State was the losing party in Geyen, not a party endorsing these trusts: the Commissioner of the Department of Human Services argued that the trust assets were available and that the state statute was not preempted, and lost on both. And the court did not bless irrevocable trusts as a category. It held that the assets of the two trusts in front of it were not available under 42 U.S.C. § 1396p(d)(3)(B) because those trust agreements barred any payment to or for the grantor. The 60-month look-back was a separate point: it had lapsed because the trusts were funded in 2011 and the application came in 2019, so no transfer penalty applied. Geyen, 964 N.W.2d 639; 42 U.S.C. § 1396p(c)(1)(A), (B)(i). Availability is still decided instrument by instrument.

Minnesota also kept its stated policy. Minn. Stat. § 256B.056, subd. 3b(a) declares it “the public policy of this state that individuals use all available resources to pay for the cost of long-term care services . . . and that trust instruments should not be permitted to shield available resources of an individual or an individual’s spouse from such use.” Paragraph (c) of the same subdivision sends every trust established after August 10, 1993 to the federal rule in 42 U.S.C. § 1396p(d). So the accurate statement is narrow. The two Minnesota sections that deemed an irrevocable inter vivos trust revocable for a long term care determination are both repealed: the revisor’s page for the earlier section carries “501B.895 MS 2014 [Repealed, 2015 c 5 art 16 s 2],” Minn. Stat. § 501B.895, and the page for its successor carries “501C.1206 MS 2020 [Repealed, 2022 c 98 art 2 s 16].” Whether a particular trust protects assets is now decided under the federal trust rules that Minnesota incorporates. 42 U.S.C. § 1396p(d); Minn. Stat. § 256B.056, subd. 3b(c).

Credit: I appreciate attorney Michael Teeter’s dedication to this issue and his written updates on this topic. I also appreciate attorney Margaret Barrett bringing the Geyen case to my attention.

Protect Assets from Nursing Home and Long Term Care Costs in Minnesota

A Medicaid Protection Trust is a marketing label rather than a term in any statute. What it describes is an irrevocable trust drafted so that no payment can be made to you, the person who funded it, under any circumstances. Where “no payment could under any circumstances be made to the individual,” that portion of the trust is not counted as a resource available to you when the county decides whether you qualify for Medical Assistance payment of nursing facility services and other long term care services, and any circumstance under which payment could be made to you or for your benefit makes that portion available instead. 42 U.S.C. § 1396p(d)(3)(B); Geyen, 964 N.W.2d 639. That same portion is then treated as an asset you disposed of as of the date the trust was established, which raises the separate transfer question below. 42 U.S.C. § 1396p(d)(3)(B); Minn. Stat. § 256B.056, subd. 3b(c).

Medicaid is called Medical Assistance in Minnesota. The Minnesota Supreme Court has stated the equivalence, quoting its own earlier decision: “Medicaid, which is known as medical assistance in Minnesota, was enacted in 1965 as Title XIX of the Social Security Act and is designed to provide medical assistance to individuals whose income and resources are not sufficient to meet the costs of their necessary care and services.” In re Schmalz, 945 N.W.2d 46, 50 (Minn. 2020) (quoting Estate of Atkinson v. Minnesota Department of Human Services, 564 N.W.2d 209, 210 (Minn. 1997)).

One correction to a claim this article carried for years. A trust of this kind does not get you coverage sooner. Funding it is an uncompensated transfer, and any such transfer made within 60 months before you request medical assistance payment of long term care services “is presumed to have been made for the purpose of establishing or maintaining medical assistance eligibility,” leaving you ineligible for long term care services for a penalty period. Minn. Stat. § 256B.0595, subd. 1(b). That presumption can be overcome: the same paragraph applies “unless the institutionalized person furnishes convincing evidence to establish that the transaction was exclusively for another purpose, or unless the transfer is permitted under subdivision 3 or 4.” Funding the trust more than 60 months before the first date you are both in a facility and have applied keeps the transfer outside the look-back; funding it inside the look-back does not destroy the trust, but it produces a penalty period measured by the value transferred. 42 U.S.C. § 1396p(c)(1)(A), (B).

The Two Conditions That Decide Whether the Trust Works

No path back to you. If “there are any circumstances under which payment from the trust could be made to or for the benefit of the individual,” that portion of the principal and its income counts as a resource available to you. 42 U.S.C. § 1396p(d)(3)(B)(i). The Geyen trusts survived because the agreements said in so many words that the “Trustee may not loan any assets to Grantor” and the “Trustee may not make gifts to Grantor,” and the court read the trustees’ otherwise broad powers as qualified by those prohibitions. The protection is a drafting outcome, not a consequence of the word “irrevocable.”

Time. A portion of the trust that can never reach you is treated as “assets disposed by the individual” as of the date the trust was established, 42 U.S.C. § 1396p(d)(3)(B)(ii), which starts a 60-month look-back running back from the first date you are both in a facility and have applied, 42 U.S.C. § 1396p(c)(1)(B)(i). In Geyen the look-back had lapsed because the trusts were funded in 2011 and the application came in 2019.

Three assumptions a reader usually brings to this subject do not survive the statute:

1. Purpose and trustee discretion do not help. The federal trust rules apply “without regard to . . . the purposes for which a trust is established, . . . whether the trustees have or exercise any discretion under the trust, . . . any restrictions on when or whether distributions may be made from the trust, or . . . any restrictions on the use of distributions from the trust.” 42 U.S.C. § 1396p(d)(2)(C). Naming the arrangement a Medicaid Protection Trust does no work, and “trust” includes “any legal instrument or device that is similar to a trust.” 42 U.S.C. § 1396p(d)(6).
2. A revocable living trust protects nothing here. In the case of a revocable trust, “the corpus of the trust shall be considered resources available to the individual.” 42 U.S.C. § 1396p(d)(3)(A)(i).
3. A trust that only looks irrevocable is treated as revocable. The Department of Human Services counts the entire principal of a trust that “[i]s called irrevocable but contains language that allows it to terminate if some action is taken by the grantor,” or that “[p]rovides that the trust can only be modified or terminated by a court.” Minnesota Health Care Programs Eligibility Policy Manual § 2.3.3.2.7.9.2 (published September 1, 2022). That manual is agency policy guidance, not law, and it also states that a trust the Department agrees is unavailable must still be evaluated for an uncompensated transfer across the 60-month look-back.

One practical worry has an answer. In Geyen, the grantor’s daughter liquidated the trusts and paid an outstanding care facility bill under threat of discharge. The court treated that as a prohibited gift and held it did not make the trust assets available, “[b]ecause the trust agreements prohibited the payment of trust funds to Geyen.” Availability is measured by what the instrument permits, not by what a trustee did.

The Asset Limit, and What It Actually Counts

To be eligible for Medical Assistance, “a person must not individually own more than $3,000 in assets, or if a member of a household with two family members, spouses, or parent and child, the household must not own more than $6,000 in assets, plus $200 for each additional legal dependent.” Minn. Stat. § 256B.056, subd. 3(a).

That figure limits countable assets, and it belongs to the eligibility category for people who are 65 or older, blind, or disabled. The same subdivision adopts the Supplemental Security Income exclusions and adds exceptions for household goods and personal effects, capital and operating assets of a trade or business necessary to earn income, motor vehicles, and designated burial expenses.

The homestead has its own rules. It is excluded for the first six calendar months of a stay in a long term care facility and for as long as you can reasonably be expected to return, which requires your attending physician, advanced practice registered nurse, or physician assistant to certify that the expectation is reasonable and a showing that the cost of care at home will be met, and for as long as it is the residence of your spouse, a child under 21, a blind or permanently and totally disabled child, or certain resident siblings and caregiving children or grandchildren. Separately, home equity above $500,000 blocks coverage for long term care services, subject to a hardship waiver, unless your spouse, a child under age 21, or a child of any age who is blind or permanently and totally disabled lawfully lives there, and that amount has been increased “beginning in year 2011, from year to year based on the percentage increase in the Consumer Price Index,” so the printed figure is a base rather than the current number. Minn. Stat. § 256B.056, subd. 2, subd. 2a; 42 U.S.C. § 1396p(f)(1), (2). A person denied coverage on home equity may file a written hardship request with the county agency, which must decide within 30 days when the necessary information has been provided.

Being over the limit is not the end of the analysis. Excess assets may be reduced by paying bills for health services incurred in the retroactive period, starting with the oldest bill, and beginning with the month of application by paying bills incurred in the period set by Minnesota Rules, part 9505.0090, subpart 2, that medical assistance would otherwise pay. Minn. Stat. § 256B.056, subd. 3d. That retroactive window narrows from three calendar months to one or two on January 1, 2028 under 2026 Minn. Laws ch. 127, art. 6, § 7.

If you are married, the spouse who stays home is not left with nothing. As the Minnesota Supreme Court explained in Schmalz, “[i]n 1988, Congress enacted the Medicare Catastrophic Coverage Act (MCCA) to prevent the impoverishment of a spouse living at home (the ‘community spouse’) when the other spouse (the ‘institutionalized spouse’) is institutionalized, typically in a nursing home, and becomes eligible for Medicaid.”

If a Transfer Falls Inside the Look-Back

The penalty is not a flat five years. Minnesota computes the months of ineligibility as “the total uncompensated value of the resources transferred divided by the average medical assistance rate for nursing facility services in the state in effect on the date of application.” Minn. Stat. § 256B.0595, subd. 2(a). A small transfer produces a short penalty; a large one can produce a penalty longer than five years.

The penalty can be eliminated by returning the transferred assets or their full cash value, and the statute allows no partial credit: “[a] period of ineligibility must not be adjusted if less than the full amount of the transferred assets or the full cash value of the transferred assets are returned.” Minn. Stat. § 256B.0595, subd. 2(e).

Not every transfer carries a penalty at all. You are not ineligible for long term care services if “the assets were transferred to the individual’s spouse or to another for the sole benefit of the spouse,” or to “the individual’s child who is blind or permanently and totally disabled as determined in the Supplemental Security Income program,” and the same subdivision covers transfers into a trust for the sole benefit of a disabled person under 65. Minn. Stat. § 256B.0595, subd. 4(a); 42 U.S.C. § 1396p(c)(2)(B).

Married and Unmarried Applicants

Federal law gives married couples no separate trust vehicle. A trust funded with your assets is treated as established by you if you or your spouse set it up during life, so having the healthier spouse create the trust does not change the analysis. A trust created by will falls outside that rule. 42 U.S.C. § 1396p(d)(2)(A).

The real difference between married and unmarried planning is the transfer exception, not the trust form. A married applicant may transfer assets to a spouse, or to another for that spouse’s sole benefit, with no transfer penalty. Minn. Stat. § 256B.0595, subd. 4(a)(1). That exception removes the transfer penalty; it does not remove the assets from the count. The same subdivision states that “[a]t the time when one spouse is institutionalized, assets must be allocated between the spouses as provided under section 256B.059.” Minn. Stat. § 256B.0595, subd. 4(a)(2). An unmarried applicant has no equivalent exception, which is why the irrevocable trust plus the 60-month look-back is the path that remains open.

You will also see the phrase “Crow Wing Trust” in Minnesota planning materials. It is not a term in any statute, and the order it points to is a January 20, 2012 Crow Wing County district court order in Braland v. Commissioner of the Minnesota Department of Human Services, Court File No. 18-CV-11-2249, which is not precedent.

Trusts That Minnesota and Federal Law Do Accept

Two of the trusts federal law excludes from the trust-counting rule matter in Minnesota planning: a trust containing the assets of a disabled individual under age 65, established for that individual by the individual, a parent, grandparent, legal guardian, or a court, with state payback at death; and a pooled trust established and managed by a nonprofit association, with separate accounts established solely for disabled individuals and state payback of amounts in the account that the trust does not retain at the beneficiary’s death. 42 U.S.C. § 1396p(d)(4)(A), (C).

Minnesota adds its own condition on the pooled trust: the beneficiary’s interest counts as an available asset unless the trust provides that the department is repaid up to the medical assistance paid on the beneficiary’s behalf, and “[t]he retained remainder amount of the subaccount must not exceed ten percent of the account value at the time of the beneficiary’s death or termination of the trust.” Minn. Stat. § 256B.056, subd. 3b(e). Since December 12, 2016, a competent disabled adult may establish the first-party trust personally rather than through a parent, grandparent, guardian, or court. Minn. Stat. § 256B.056, subd. 3b(f).

If your trust assets are counted and the result would be severe, there is a statutory route to relief: “[t]he State agency shall establish procedures . . . under which the agency waives the application of this subsection with respect to an individual if the individual establishes that such application would work an undue hardship.” 42 U.S.C. § 1396p(d)(5).

How Minnesota Law Got Here: Braland, the Department’s Position, and Geyen

The so-called Crow Wing Trust is an irrevocable trust named after a case decided in Crow Wing County, Braland v. Commissioner of the Minnesota Department of Human Services, No. 18-CV-11-2249 (Minn. Dist. Ct. 9th Jud. Dist. Jan. 20, 2012). The district court held that Minnesota’s trust busting statute, Minn. Stat. § 501B.895(b), was preempted by the federal law governing medical assistance treatment of trusts, and it “vacate[d] and remand[ed] this matter to the Department of Human Services.”

Two features of that order are often misdescribed. The court reached preemption “[f]ollowing the doctrine of constitutional avoidance” and never decided the overbreadth and vagueness challenge, notwithstanding the word “Unconstitutionality” in the linked file’s name. And it did not hold the trust assets protected: it removed the state statute from the analysis and sent the availability question back to the Department, “[f]inding the record on this point sparse.” Braland is a district court order. It resolved that appeal and was not precedent binding other Minnesota courts.

The Legislature repealed section 501B.895 in 2015 Minn. Laws ch. 5, art. 16, § 2, and enacted Minn. Stat. § 501C.1206 in the same act, at art. 12, § 6. Both sections provided that when a state or local agency makes a long term care determination, an irrevocable inter vivos trust created on or after July 1, 2005 and holding the individual’s assets or income “becomes revocable for the sole purpose of that determination.” On a 2019 application in Carver County, the county agency counted two 2011 irrevocable trusts as revocable under section 501C.1206, and the Commissioner later argued in district court that the paragraph “was not preempted by federal law.”

That is the argument the Court of Appeals rejected statewide in Geyen. The ground was federal, not constitutional: the court reasoned that “section 501C.1206(b) is a more restrictive methodology than its federal counterpart because individuals who would otherwise be eligible under federal law are deemed ineligible by operation of the state statute,” contrary to the no-more-restrictive requirement of 42 U.S.C. §§ 1396a(a)(10)(C)(i)(III) and 1396a(r)(2)(B). The Legislature repealed the section the next year.

Older versions of this article argued that the Department’s county-by-county position was wrong by analogy to a 2002 federal case. That analogy is no longer needed, and it was always narrower than it looked. In Devescovi v. Ventura, 195 F. Supp. 2d 1146, 1149 (D. Minn. 2002), a federal court dismissing a constitutional challenge as moot concluded “that Beltrami County is bound by the decision” a Hennepin County district court had entered against the State. It gave reasons tied to that one judgment: counties are political subdivisions of the state, the county attorney represents the state in such prosecutions, no defendant appealed, and the Hennepin County court had “certified a statewide plaintiff class to ensure that the benefits of its decision would be available to all proposed class members.” Those reasons run to finality and to who was already bound by that judgment, not to precedent: because the State never appealed, the ruling was “now binding state law.”

A related claim also needs retiring. A state law that conflicts with the federal Medicaid trust rules falls under the Supremacy Clause, and the analysis runs provision by provision: Minnesota’s paragraph fell because it “conflicts with and is therefore preempted by federal law.” Geyen, 964 N.W.2d 639. In Lewis v. Alexander, 685 F.3d 325 (3d Cir. 2012), the Third Circuit held several provisions of a Pennsylvania trust statute preempted while upholding its enforcement provision as “a reasonable exercise of the Commonwealth’s retained authority to regulate trusts,” and expressly “respectfully disagree[d] with the conclusion of the Second and Tenth Circuits.” That decision is persuasive only in Minnesota and binds no Minnesota court or agency; Geyen supplies the Minnesota rule.

Risks That Remain

The two risks this article once listed have both changed. The Court of Appeals resolved the preemption question in a published decision in 2021, and the Legislature repealed Minn. Stat. § 501C.1206 in 2022. What is left is narrower and more practical.

The Department can still challenge your trust on its terms. That is what happened in Geyen, and the fight is not quick. The court described the route a denial travels: an appeal and a hearing before a human-services judge, a recommendation to the commissioner, who issues the final decision, then an appeal to district court and from there to the Court of Appeals. Minn. Stat. § 256.045, subds. 1, 3(a)(1), 5, 7, 9.

Estate recovery is a separate test from eligibility. Clearing the availability test does not put trust real property beyond medical assistance estate recovery. In Hammerberg v. Minnesota Department of Human Services, No. A23-0901 (Minn. App. Apr. 22, 2024), the Court of Appeals held that real property held in a 2005 irrevocable trust was subject to a lien under Minn. Stat. § 256B.15, subd. 1a(b)(5), where the settlor had kept the use, possession, and income of the property, the power to remove the trustee, and a testamentary power of appointment: “Because the agency correctly determined the real property was subject to a lien, we reverse the district court.” That opinion states on its face that it “is nonprecedential except as provided by Minn. R. Civ. App. P. 136.01, subd. 1(c),” so it is not binding precedent in another case and may be cited only as persuasive authority. It is worth knowing because Geyen speaks to eligibility and says nothing about recovery at death.

The governing federal statute is current, with one dated change ahead. 42 U.S.C. § 1396p was last amended on July 4, 2025, by Pub. L. No. 119-21, tit. VII, § 71108, and that amendment reaches only the home equity limit in subsection (f)(1), applying beginning January 1, 2028. It leaves the trust rules in subsection (d) and the transfer look-back in subsection (c) intact. Minnesota made a parallel change, capping the indexed home equity limit at $1,000,000 effective January 1, 2028. 2026 Minn. Laws ch. 127, art. 6, § 6.

If you are considering this planning, the questions worth answering first are whether the trust terms foreclose every payment back to you, whether you can wait out 60 months from funding, and what you intend for the house. If you or a family member is already in a nursing home, ask about crisis Medical Assistance planning instead, because the look-back has already started running against you.