John Crow 
Many Tennessee families create revocable living trusts expecting these trusts will protect their savings if a spouse or parent needs nursing home care. While revocable trusts serve important estate planning purposes, they do not shield assets from TennCare Medicaid eligibility rules or estate recovery after death.
Key Takeaways
A revocable living trust helps Tennessee families avoid probate, plan for incapacity, and keep estate matters private. However, because the grantor (the trust creator) retains full control and can revoke the trust at any time, TennCare and the federal government treat the assets inside as belonging to the grantor. This means those assets count against TennCare’s strict resource limits for nursing home coverage.
Protecting assets from long-term care costs usually requires planning well in advance. For example, executing an irrevocable Medicaid Asset Protection Trust (MAPT) is a way to protect your home and other assets from Medicaid. MAPTs must be set up at least five years before applying for Medicaid to satisfy the look-back period.
What Is a Revocable Living Trust and How Does It Work in Tennessee?
A revocable living trust is a legal document created during your lifetime to hold and manage assets like your home, bank accounts, and investments. You can change or revoke it at any time. The grantor usually names themselves as trustee, managing the trust assets according to its terms.
For example, a married couple in Montgomery County might be co-grantors and co-trustees. They name themselves as beneficiaries during life and their children as remainder beneficiaries after death. If one spouse becomes incapacitated, a successor trustee takes over without needing a Tennessee conservatorship.
Assets must be transferred into the trust to be effective. For instance, a deed for a Nashville rental property must change from “John Smith” to “John Smith, Trustee of the Smith Revocable Trust dated June 1, 2026.” Assets not titled in the trust may still go through probate at death. For more, see our guide on properly funding a Tennessee revocable living trust.
Tennessee law recognizes revocable trusts as a standard estate planning tool, and Crow Estate Planning and Probate, PLC regularly drafts them for clients throughout Middle Tennessee.
Common Benefits of a Revocable Trust in Tennessee (And Their Limits)
Many Tennesseans create revocable trusts to simplify estate matters, but they often misunderstand what these trusts actually do.
What a revocable trust does well:
- Probate avoidance. It avoids probate in counties like Montgomery, Davidson, and Robertson, preserving privacy and reducing delays. Trust documents do not become public record, unlike wills.
- Incapacity planning. A successor trustee can manage funds if the grantor becomes incapacitated, avoiding conservatorship.
- Out-of-state property. It helps avoid multiple probate proceedings for property in other states like Kentucky or Florida.
- Managed distributions. Contingent trusts can provide children with managed distributions rather than lump sums, useful when beneficiaries are young.
What a revocable trust does not do:
- It does not lower or help avoid estate taxes; the IRS treats trust assets as owned by the grantor.
- It does not protect assets from creditors or TennCare nursing home cost rules.
- It cannot name guardians for minor children; wills are needed for that.
Why a Revocable Trust Does Not Protect Assets from TennCare Medicaid
TennCare Medicaid eligibility focuses on who controls the assets. Because the grantor controls all decisions in a revocable trust, TennCare treats trust assets as belonging to the grantor. TennCare policy states that revocable trust principal is always considered an available resource.
Here are key 2026 limits for a single nursing home applicant in Tennessee:
| Category | Limit |
| Countable asset limit | $2,000 |
| Monthly income limit | $2,982 |
| Home equity cap | $752,000 |
Bank accounts, investment accounts, and non-exempt real estate titled in a revocable trust count as resources. For example, a Springfield resident with $80,000 in a revocable trust well exceeds the $2,000 limit and would not qualify for TennCare nursing home services until those funds are spent down or otherwise addressed.
Putting your Tennessee home in a revocable trust does not change its TennCare treatment while you live there. The primary residence is generally exempt up to the $752,000 equity cap whether titled individually or in the trust.
After a TennCare recipient’s death at age 55 or older, the state can seek reimbursement from the probate estate and, in many cases, from the decedent’s interest in a revocable trust. Tennessee Code Section 71-5-116 allows these claims.
Moving money into a revocable trust just before applying for TennCare does not avoid transfer penalties because the applicant retains full control. TennCare looks at substance, not just title.
How an Irrevocable Medicaid Asset Protection Trust Differs
An irrevocable trust, or Medicaid Asset Protection Trust (MAPT), changes who controls property and can protect assets from TennCare nursing home costs when used properly. The grantor gives up control and appoints a different trustee, like an adult child, to manage the trust according to fixed rules.
Because the grantor cannot revoke the trust or freely reclaim assets, TennCare may treat those assets as non-countable after the five year look back period. MAPTs remove assets from the eligibility calculation once the look back expires.
Example: A Clarksville couple funds an irrevocable trust with $150,000 and their Montgomery County home in 2026. If they remain healthy until 2031, those assets are protected when they apply for TennCare. If they apply during that five year period post-funding, TennCare treats the transfer as a gift and imposes a penalty period. During this penalty period, the couple would be ineligible for TennCare/Medicaid.
MAPTs also protect assets from Medicaid Estate Recovery after death, unlike revocable trusts where the state can pursue claims against trust property.
Trade-offs to consider:
- The grantor loses the ability to access principal freely.
- Trust terms are difficult to change once established.
- Drafting must preserve tax benefits like a step-up in basis for beneficiaries.
Crow Estate Planning and Probate, PLC structures these trusts to comply with TennCare policy and fit each client’s goals.
When Tennessee Families Should Consider Trust-Based Medicaid Planning
To be clear, not everyone needs an irrevocable Medicaid Asset Protection Trust. Age, health, and, most importantly, asset levels matter when deciding whether to go beyond a revocable trust and will. Clients with muti-million dollar estates are unlikely to ever need or even qualify for Medicaid.
Typical candidates for Medicaid include married couples in their late 60s with a paid-off home worth $450,000 and $300,000 in savings. This couple wants to preserve an inheritance even if one spouse enters a nursing home. Tennessee’s spousal impoverishment rules protect some resources for the healthy spouse, but even couples with more significant assets can still lose significant savings to long-term care costs relying only on TennCare’s basic protections.
The best time to explore irrevocable trust planning is when clients are healthy, often in their early to mid-60s, so the five-year look-back can run before nursing home need arises. Once care is imminent, many strategies are too late to help.
If you live in Tennessee, schedule a consultation to discuss your options under Tennessee Medicaid rules.
Frequently Asked Questions About Revocable Trusts and TennCare in Tennessee
Can I convert my revocable trust into an irrevocable Medicaid Asset Protection Trust in Tennessee?
No. A new irrevocable Medicaid Asset Protection Trust trust must be created and assets transferred under Tennessee law. The five year look back starts when assets transfer into the new trust, not when the original revocable trust was created. An experienced attorney can guide this process.
Does putting my Tennessee home into a revocable trust protect it from TennCare estate recovery after death?
No. TennCare can seek recovery from assets in a revocable trust after death. Protection depends on whether a surviving spouse, a child under 21, or a disabled child remains. Specific Tennessee exemptions and hardship provisions may apply, but the trust itself does not shield assets.
How does a revocable trust affect my spouse if I enter a nursing home and apply for TennCare?
Trust assets are treated as available to the applicant and may count toward combined resources for the institutionalized and community spouse. Tennessee’s spousal impoverishment rules allow the community spouse to keep a protected share, but a revocable trust does not increase that amount. A thorough eligibility review is important before applying.
Can a revocable trust help me qualify for Veterans Affairs benefits as well as TennCare?
VA rules differ but the principle is similar. A revocable trust does not hide assets for VA needs-based benefits like Aid and Attendance. Coordinated planning with an attorney familiar with both systems is important to avoid conflicts. Crow Estate Planning and Probate, PLC can help create a plan that accounts for both programs.
About the Author
With nearly two decades of legal experience, John advises individuals and families on wills, trusts, probate matters, and complex inheritance disputes. His practice includes both practical estate planning for families seeking clarity and peace of mind and sophisticated planning for high-net-worth individuals involving advanced trust structures and asset protection strategies.
Over the course of his career, he has helped hundreds of families plan their estates, administer probate estates, and resolve contested inheritance matters.
John earned his Bachelor of Arts in History with honors from Vanderbilt University and his Juris Doctor from Cumberland School of Law at Samford University. He is based in Clarksville, Tennessee and works with clients throughout Middle Tennessee and Western Kentucky. Learn More.
Licensed in Tennessee and Kentucky