The Trust That Didn't Do What He Thought It Did
Frank Rivera retired in 2023 from a senior operations role at a logistics company headquartered in the Legacy Drive corridor just south of Frisco. He and his wife Catherine had moved to Frisco from Houston in 2015 when a corporate relocation brought them north, and they had planted themselves in the Phillips Creek Ranch neighborhood with the intention of staying. Two years after moving, they had hired a good estate planning attorney and done the work: a fully funded revocable living trust, updated wills with independent administration clauses, durable powers of attorney, medical powers of attorney, healthcare directives, and properly aligned beneficiary designations on every retirement account and insurance policy. The attorney had told them they were in good shape. For estate planning purposes, they were.
In 2022, Frank's older brother David — also Houston-based, also holding a revocable living trust — was diagnosed with Lewy body dementia at seventy-one and moved into a memory care facility in the Woodlands. The monthly cost was $8,500. Medicare covered sixty days of skilled nursing care after a hospitalization; after that, nothing. David's trust had approximately $750,000 in it: a paid-off home, a brokerage account, and an IRA. The home had to be sold. The brokerage account was spent down. The IRA was liquidated and taxed. By 2025, the trust was exhausted, David qualified for Medicaid, and the nursing facility moved him to a Medicaid bed.
Frank watched this happen from Frisco. When it was over, he called an elder law attorney at WG Law and asked a question he had never thought to ask his estate planning attorney: does our trust protect our assets from nursing home costs the way it protects them from probate?
The answer was no. And understanding why — and what does work — is the reason Frisco families with well-funded estate plans still need an elder law conversation.
What a Living Trust Does (and What It Doesn't)
A revocable living trust serves two primary functions. It avoids probate: assets titled in the trust name pass to beneficiaries after your death without a court proceeding, faster and at lower cost than a will-based estate. And it provides management continuity: if you become incapacitated while alive, a successor trustee can manage trust assets without a court-supervised guardianship proceeding.
What a revocable living trust does not do is protect assets from Medicaid spend-down.
The reason is definitional. Texas Medicaid for long-term care (nursing home coverage) evaluates eligibility based on the applicant's countable resources. A resource is countable if the applicant could convert it to cash and use it for their support. A revocable living trust is fully countable because the grantor — the person who created it — retains the right to revoke it at any time. The trust has no independent legal existence that protects its contents from being treated as the grantor's own property for Medicaid purposes. Everything inside a revocable trust is counted exactly as if it were in a checking account in the grantor's own name.
David Rivera's Woodlands estate plan protected his family from probate. It did not protect his assets from the nursing home. The trust worked exactly as designed for the purpose it was designed for. Long-term care spend-down is a different problem, and it requires different legal tools.
The Medicaid Rules That Apply to Frisco Families
Texas Medicaid for long-term care is administered by the Texas Health and Human Services Commission (HHSC) under federal Medicaid rules. The eligibility framework has three components that matter most for planning purposes.
The asset limit. A Medicaid applicant may hold no more than $2,000 in countable resources. The primary home is exempt while the community spouse remains in it. One vehicle is exempt. A term life insurance policy is exempt if its face value is $1,500 or less. Everything else — brokerage accounts, savings accounts, CDs, investment real estate, cash value life insurance above the limit, and the contents of a revocable trust — is countable. For a Frisco couple with $900,000 in investment and retirement accounts, the applicant must spend down to $2,000 before Medicaid begins paying. The community spouse retains the Community Spouse Resource Allowance — in 2026, $162,660 — plus the exempt home and one vehicle. The remaining assets must be spent, restructured, or planned around before Medicaid eligibility is established.
The five-year look-back. Any transfer of assets for less than fair market value within 60 months before a Medicaid application is presumed to be a disqualifying transfer, made to reduce countable assets and qualify for Medicaid. The penalty for a disqualifying transfer is a period of Medicaid ineligibility. The length of the penalty is calculated by dividing the transferred amount by the Texas HHSC's current daily divisor — for 2026, that figure is $262.37 per day. A transfer of $200,000 generates a penalty period of approximately 763 days, during which Medicaid will not pay for nursing home care even though the applicant is otherwise eligible.
The practical implication of the look-back rule is that the most powerful Medicaid planning strategies require five years of lead time to work cleanly. Irrevocable trust structures that remove assets from the countable estate need to be established now, not when nursing home care becomes imminent. The families who have the most options are those who begin planning while both spouses are healthy and the five-year window is not a constraint.
The income cap. Texas Medicaid for long-term care applies an income cap: applicants whose gross monthly income exceeds $2,982 per month in 2026 are not eligible unless they establish a Qualified Income Trust — commonly called a Miller Trust. A Miller Trust is an irrevocable trust that receives the applicant's excess income each month; the funds are used to pay the patient's share of care cost, and any remainder reverts to Medicaid at death. For Frisco families where one spouse has a pension, Social Security, or required minimum distributions from retirement accounts, the income cap can be an unexpected obstacle to Medicaid eligibility — and knowing about it in advance allows the planning to address it.
Why the Frisco Asset Profile Creates Specific Exposure
Frisco's growth over the past two decades has been shaped by corporate relocations and the professional families that followed. Residents who moved here in the 2000s and 2010s from other states are now in their late fifties and sixties. Many brought asset structures — trusts, beneficiary designations, retirement accounts — designed for common-law property states like Michigan, Illinois, or California, where community property rules do not apply. Texas is a community property state, and that difference affects how assets are counted, how they pass, and what strategies are available for Medicaid planning.
It also means that Frisco families who did their estate planning before moving to Texas — or whose planning was done in Texas but focused on probate avoidance rather than long-term care — have two separate planning gaps. The first is the revocable trust misconception that Frank Rivera identified. The second is the Texas-specific structure of community property and how it interacts with the CSRA rules, spousal impoverishment protections, and the strategies that exist for protecting assets in a long-term care scenario. An out-of-state estate plan does not equal a Texas elder law plan. A Texas probate plan does not equal a Texas Medicaid plan.
For more on the Medicaid numbers that govern the planning — the 2026 penalty divisor, the CSRA figure, income cap, and worked spend-down examples — see our Medicaid planning cost guide for Texas.
The Tools That Actually Work for Long-Term Care Protection
Free Guide
Elder Law Planning Workbook
Essential steps for protecting aging parents in Texas
Elder law planning for long-term care uses a different set of legal instruments than estate planning. The core tools depend heavily on timing: how many years remain before nursing home care may be needed, how the assets are currently structured, and whether one or both spouses are healthy.
Irrevocable Medicaid asset protection trusts. Assets transferred to an irrevocable trust are no longer owned by the grantor — the grantor cannot revoke the trust or reclaim the assets — which means they are not countable for Medicaid purposes after the five-year look-back period has passed. An irrevocable trust that is funded today begins a five-year clock. If the grantor does not need Medicaid within five years, the trust assets are protected. The grantor can often retain rights to trust income (not principal) and name beneficiaries for the remainder at death. This is structurally different from a revocable trust: giving up the right of revocation is precisely what creates the Medicaid protection.
Lady Bird deeds for the home. A Lady Bird deed — also called an enhanced life estate deed — allows a homeowner to transfer the property to named beneficiaries at death while retaining full control during life: the right to sell, mortgage, or change beneficiaries without the beneficiaries' consent. The home passes outside of probate. And because the homeowner retains a life estate with retained rights, the transfer does not trigger the five-year look-back — which means a Lady Bird deed can protect the home from Medicaid estate recovery without the five-year wait. For Frisco families whose primary home is a significant asset, a Lady Bird deed combined with proper titling can preserve the home for heirs even after a nursing home stay. See our guide to Lady Bird deeds in Texas estate planning for the mechanics.
Community Spouse Resource Allowance planning. When one spouse enters a nursing home and applies for Medicaid, the community spouse is protected from impoverishment by federal rules that preserve a defined share of countable assets — the CSRA of $162,660 in 2026 — for the spouse who remains at home. Structuring asset ownership before a Medicaid application to maximize the CSRA, ensure exempt assets are properly titled, and coordinate with the nursing home's patient pay obligations is a core elder law planning task. This planning is most effective when it happens before the nursing home stay, not during it.
Spousal asset transfers and Medicaid-compliant annuities. Under certain circumstances, one spouse can transfer assets to the other in ways that are Medicaid-compliant even within the five-year look-back. A Medicaid-compliant annuity that converts countable assets to an income stream for the community spouse is one such strategy. These tools are technically complex and highly fact-specific; their availability and effectiveness depend on the couple's total asset picture, income, and the specific timing of the nursing home application. They are most valuable as part of a broader plan designed by an elder law attorney rather than used in isolation.
Three Planning Situations and What They Look Like
Proactive planning while healthy. Frank and Catherine Rivera, both in their late sixties and in good health, are the ideal planning scenario. The five-year look-back is not a constraint. The full menu of strategies is available. The conversation begins with what they actually have: the revocable trust inventory, the retirement accounts, the home's current titling, Catherine's Social Security and Frank's pension. From that inventory, an elder law attorney builds a plan that addresses both the estate planning goals (which the current trust serves well) and the long-term care risk (which it does not address at all). For a Frisco couple with a paid-off home in Phillips Creek Ranch and $1.2 million in retirement and investment assets, that plan likely includes a Lady Bird deed for the home and a discussion of whether any portion of the investment assets should be restructured now to start the five-year clock. At minimum, it includes updated powers of attorney and healthcare directives confirmed to current capacity standards — because those documents are the first line of defense in a capacity crisis, before any Medicaid question arises.
Post-diagnosis planning. A Frisco resident receives an Alzheimer's or Parkinson's diagnosis. The capacity window may still be open — many people retain legal capacity to execute documents well after a diagnosis — but the clock is now visible. The elder law attorney's first task is assessing capacity and moving quickly to execute any documents that can still be signed. Medicaid planning with a compressed look-back window requires different strategies than planning with five years of lead time, but there are tools available at every stage. For families in this situation, see our article on what to do legally after a dementia diagnosis in Texas.
Crisis intervention. No documents were ever signed. Or the stroke has already happened and signing is no longer possible. Or the nursing home move is happening now and there was no prior planning. This is the situation that Frank Rivera's brother David found himself in — a trust that didn't protect him from Medicaid spend-down, no irrevocable planning, no Lady Bird deed on the home. WG Law handles guardianship applications in the Collin County Probate Court — the same court that serves Frisco residents, located at the Collin County Courthouse in McKinney — when voluntary execution of documents is no longer possible. Concurrent with guardianship, we assess what Medicaid planning remains available at the crisis stage and implement whatever strategies the timeline allows.
For families worried that a crisis has already closed the window on meaningful planning: it has not. The options are more constrained than with five years of lead time, but they are not zero. See our article on how the Texas Medicaid five-year look-back period works for the full framework on what strategies remain inside the look-back window.
WG Law's Elder Law Practice in Frisco
Elder law planning at WG Law is led by Taylor Willingham, the firm's founding attorney. Taylor has guided more than 10,000 clients through estate planning and elder law decisions over fifteen years of practice. He is the author of five books on estate planning and elder law and was recognized as a Super Lawyers Rising Star from 2019 through 2022. He handles Medicaid planning, powers of attorney, guardianship applications, Lady Bird deeds, irrevocable trust structures, and long-term care strategies across Collin County and the broader DFW metroplex.
Frisco falls under Collin County's jurisdiction. Guardianship matters and probate proceedings for Frisco residents are filed at the Collin County Courthouse in McKinney — ten minutes from WG Law's McKinney office at 7701 Eldorado Pkwy, Suite 200, McKinney, TX 75070. For Frisco residents on the Tarrant County side or farther west in the DFW metroplex, the firm also serves clients from its Southlake office at 1560 E Southlake Blvd, Suite 100.
If you are a Frisco-area family who has done estate planning but has not addressed long-term care risk, the question Frank Rivera asked is worth asking: does your current plan actually protect your assets from nursing home costs? For most families with a revocable trust and no additional Medicaid planning, the answer is no — and the earlier that answer arrives, the more options remain available.
For the Elder Law city posts covering the broader Collin County market, see our guides for McKinney-area elder law planning and Plano elder law planning. For related reading on specific tools and strategies, see our articles on protecting your home from Medicaid in Texas, how Texas law protects the community spouse's assets, and Lady Bird deeds in Texas estate planning.
For more about WG Law's elder law services, visit our elder law practice area page or see our Frisco location page. For the 2026 Medicaid figures — penalty divisor, CSRA, income cap, and worked examples — see our Medicaid planning cost guide for Texas.
Call 214-250-4407 or request a consultation with WG Law's elder law team. The planning window is open now. The question is whether it will still be open when you need it.
This article is general information about Texas elder law and is not legal advice. Medicaid planning is highly fact-specific and depends on individual asset structures, health status, and timing. Consult a licensed Texas attorney before making decisions about long-term care planning or asset protection.