Using a Trust to Protect Assets From Long-Term Care Costs

It’s normal to feel uneasy about how quickly long-term care costs can consume assets that were meant to support you or your family. You’re not alone in these concerns, and thoughtful planning can help ease some of that worry.

At Richard L. Vanderslice, P.C., we work with clients throughout Philadelphia, Pennsylvania, and the surrounding areas of Philadelphia County, Montgomery County, and Delaware County, who want to protect what they’ve worked hard to build. 

Our focus is on helping you make informed choices about planning tools, including trusts, that can reduce financial stress later in life. With the right approach, planning for long-term care doesn’t have to mean giving up control or peace of mind. Reach out to us to start a conversation about your goals and concerns.

How Trusts Can Help Protect Assets

A trust is a legal arrangement where assets are held by one party for the benefit of another. When used thoughtfully, certain trusts can help shield assets from being spent on long-term care costs while still allowing you to benefit from them in limited ways. This balance can be especially important for people who want to plan ahead without feeling like they’re giving up everything they’ve worked for.

Rather than focusing on a single benefit, trusts protect assets in several practical ways. Each layer of protection plays a role in reducing financial exposure while supporting long-term planning goals.

Removing Assets From Personal Ownership

One of the primary ways trusts protect assets is by changing how those assets are owned. When assets are transferred into a properly structured trust, they’re no longer held in your individual name. This separation can be critical when long-term care costs become a concern.

By removing assets from personal ownership, a trust may help prevent those assets from being counted when determining how care is paid for. While this doesn’t eliminate all financial responsibility, it can reduce the amount of your personal savings and property at risk.

Limiting How Assets Can Be Spent

Trusts also protect assets by setting clear limits on how they can be used. The terms of the trust spell out when distributions are allowed and for what purposes. This structure helps prevent assets from being drained too quickly during extended care needs.

These limits aren’t about restriction for the sake of restriction. Instead, they provide guardrails that help stretch resources further while keeping them aligned with your long-term intentions.

Preserving Assets for Loved Ones

Another key way trusts protect assets is by preserving them for future beneficiaries. Without planning, long-term care costs can significantly reduce or eliminate what’s left to pass on. Trusts create a clear path for assets to pass to loved ones rather than be fully consumed by care expenses.

This can be especially meaningful for people who want to support children, grandchildren, or other family members while still planning responsibly for their own care.

Providing Clear Instructions During Incapacity

If you’re unable to manage your finances due to illness or injury, trusts offer built-in guidance. A chosen trustee steps in to follow the instructions you’ve already put in place, helping avoid confusion or disputes during stressful times.

This clarity protects assets from mismanagement and gives loved ones confidence that they’re acting in line with your wishes, even when difficult decisions need to be made.

Supporting Long-Term Planning Flexibility

Trusts can also be structured to account for changes over time. While you may be healthy now, planning ahead allows you to respond to future care needs without requiring rushed decisions. This flexibility helps protect assets by avoiding reactive choices made during emergencies.

It’s important to remember that trusts aren’t one-size-fits-all. The way a trust is drafted, funded, and managed makes a real difference in its effectiveness for long-term care planning. When thoughtfully designed, a trust can serve as a steady foundation for protecting assets while supporting peace of mind.

Common Trust Options Used for Long-Term Care Planning

Several types of trusts are commonly used when planning for long-term care costs. Each has its own purpose and trade-offs, and the right choice depends on your goals, timeline, and comfort level with giving up control over certain assets.

The most common trusts used for asset protection include:

• Irrevocable trusts: Assets transferred into these trusts generally can’t be taken back by you. Due to this, they may not be counted as your personal assets after certain waiting periods. These trusts can help preserve assets for children or other beneficiaries. You give up direct control, but you gain a level of protection from future care costs.

• Income-only trusts: These trusts allow you to receive income generated by the trust assets. The principal is preserved for beneficiaries and may be protected from long-term care expenses. They’re often used by people who want some financial benefit while still planning ahead.

• Testamentary trusts: These trusts are created through a will and take effect after death. While they don’t protect assets during your lifetime, they can help protect a surviving spouse or heirs. They’re sometimes used alongside other planning tools.

Each of these options comes with advantages and limitations. A thoughtful discussion about your priorities with an experienced estate planning lawyer can help determine whether one of these trust structures fits into your overall plan.

Finding Reassurance Through Trusts

Trusts can be part of a compassionate approach to planning. They offer a way to look ahead without assuming the worst, allowing you to prepare while still focusing on living well today. When used thoughtfully, trusts can protect assets, support loved ones, and provide a sense of calm about the future.

At Richard L. Vanderslice, P.C., we help clients across Philadelphia County, Montgomery County, and Delaware County explore planning options that align with their values and priorities. If you’re ready to talk about how trusts might fit into your plans, reach out to us and start the conversation today.