5 Ways to Protect Your Home and Savings From Medicaid Estate Recovery

You may believe your estate plan is solid - will, trust, powers of attorney, all in place. But what if we told you that Medicaid Estate Recovery could still take your home and savings after you're gone?

This isn’t just a legal technicality. It's a real and devastating process that forces thousands of families each year to sell their parents’ home, liquidate retirement accounts, or drain joint savings just to repay the state. For retirees who have spent decades building wealth and protecting their family, the consequences go far beyond finances - they fracture family relationships, ignite sibling disputes, and unravel carefully laid legacy plans.

The Real Cost of Medicaid Recovery

The Medicaid Estate Recovery Program allows states to recover the cost of long-term care from the estates of deceased Medicaid recipients. That often means filing a claim against the home, sometimes within months of death. Without proper planning, a modest estate can face $100,000+ in unexpected claims, especially if assets pass through probate.

This risk affects modest to high-net-worth retirees alike - particularly those with property and savings but no strategy to protect them from Medicaid's reach.

Why “Having an Estate Plan” Isn’t Enough

Too many families assume that a will or trust automatically shields their assets. But the truth is, documents alone don’t protect your home or savings from Medicaid recovery. If the assets pass through probate, Medicaid can (and often will) file claims - even when you thought you’d done everything right.

What’s worse, strategies like adding children to the deed or relying on beneficiary designations can trigger tax consequences, disinheritance issues, and family discord.

Financial & Tax Consequences You Didn’t See Coming

Without proper coordination between your legal documents and your financial accounts, you risk:

• Your retirement accounts going through probate due to outdated or missing beneficiary designations

• Your home being subject to recovery if no deed-based bypass (like a Lady Bird or TOD deed) is in place

• Triggering capital gains taxes or disqualifying family caregivers due to incorrect asset transfers

If you’re wondering, “How can I protect my assets from Medicaid while still keeping control?”  - you’re not alone.

Five Core Strategies to Avoid Medicaid Estate Recovery

A strong estate plan doesn’t just distribute your assets - it protects them from unnecessary loss. These five strategies can help you safeguard your home and savings from Medicaid Estate Recovery and make sure they go where you intended.

1. Lady Bird Deed

Transfers your home directly to your beneficiaries upon death—outside of probate—while allowing you to keep full control during your lifetime. You can sell, refinance, or revoke the deed if needed, which makes it one of the most flexible tools in Medicaid planning (available in select states).

2. Transfer on Death (TOD) Deed

Similar to a Lady Bird Deed in that TOD avoids probate, but requires formal execution and recording during your lifetime. While it offers less flexibility, it’s more widely available across states.

3. Move Non-Home Assets Outside Probate

Avoiding probate isn’t just about real estate. Add POD (Payable on Death) or TOD designations to bank and brokerage accounts, and ensure life insurance and retirement accounts have up-to-date beneficiaries. These simple steps can prevent assets from going through probate and being subject to Medicaid recovery.

4. Medicaid Asset Protection Trust

A Medicaid Asset Protection Trust is an irrevocable trust specifically designed to protect your home and savings once the five-year Medicaid lookback window has passed. Once assets are transferred into the trust and the window has cleared, they’re generally shielded from estate recovery.

5. Convert Countable Assets to Exempt Income

With the right structure, Medicaid-compliant annuities or promissory notes can turn excess countable assets into income streams that Medicaid doesn’t count the same way. These tools are highly technical and state-dependent but can be powerful in the right situation.

Each strategy must be used carefully - and the key is coordination between your estate plan and your financial accounts. Without that alignment, even well-drafted legal documents can fail to protect your legacy.

Why Acting Now Matters

These are not decisions to delay until care is needed. Timing is everything. Medicaid has a five-year lookback window, and planning done too late can disqualify you from benefits or expose your estate to full recovery.

And the consequences? Family homes sold under pressure. Years of savings lost. Siblings pulled apart by resentment and blame.

If you're asking, “Can Medicaid take my house after death?” - the answer is yes, unless you take action to prevent it.

Ready to protect your legacy with confidence?

Let’s start a conversation. Book a free initial call and learn how we can help you protect what you’ve built and secure a stronger financial future for your loved ones.