Can You Use Money from an Irrevocable Trust to Pay for the Grantor’s Care?

At Zeus Estate Planning, we often get asked, “Can I take money out of my mom’s irrevocable trust to cover her assisted living expenses?” It’s a common question, but the answer is straightforward: No, you cannot directly use the money from the trust to pay for the grantor’s care.

When an irrevocable trust is set up, assets are transferred out of the grantor’s control. This is by design – the purpose is to protect those assets from being counted for Medicaid purposes. The trust explicitly states that the grantor (in this case, your mom) cannot access the funds. This is essential for ensuring Medicaid protection, as assets that remain accessible to the grantor could also be accessible to Medicaid.

So, what happens if the trustee decides to go against the terms of the trust and pays for the grantor’s expenses anyway? Doing so could invalidate the trust, and Medicaid could view it as an indication that the assets were never really protected. Essentially, the entire purpose of the irrevocable trust would be undermined.

But there is a way to use the trust assets in a more indirect manner. At Zeus Estate Planning, the irrevocable trusts we create allow the trustee to distribute assets to the trust beneficiaries (typically the children or grandchildren). Once the beneficiaries receive these assets, they can do whatever they wish with the funds. Whether it’s helping pay for the grantor’s care or taking a well-deserved vacation, the money is theirs, with no strings attached.

This option allows families to have some flexibility while still protecting assets from Medicaid. If you find yourself in a similar situation, talk to the trustee and beneficiaries about your options.

If you have any more questions or need guidance on estate planning, don’t hesitate to reach out. We’re here to help.

Stay connected with Zeus Estate Planning, and stay safe!