Mr. Haynes Explains: Why Medicaid Asset Protection Trusts Are Often a Rip-Off for Tennesseans

Over the holidays, a family member pulled me aside with a question that I hear more often than you might think.

They had attended a seminar about Medicaid Asset Protection Trusts in Tennessee. The room was full of seniors. The presentation was polished. The message was reassuring. And by the end, it felt like if you didn’t sign up for this trust, you were setting your family up for financial disaster.

They asked, plainly:

“Is this actually legit?”

As a Tennessee lawyer—and as someone who takes the idea of Trusted Counsel seriously—I told them the truth. It’s the same truth I owe anyone who comes to my office for estate planning or Medicaid planning advice.

For most Tennesseans, Medicaid asset protection trusts are oversold, misunderstood, and often the wrong tool entirely.

The Problem with the Medicaid Trust Sales Pitch

Medicaid asset protection trusts are frequently marketed by:

• Seminar presenters targeting seniors
• Non-lawyer “estate planners”
• High-volume firms using fear-based scripts

The pitch usually sounds like this:

“Put your assets in this trust, protect everything from the nursing home, and qualify for Medicaid when the time comes.”

It sounds simple. It sounds safe. And it sounds reassuring.

But it is not how Medicaid law actually works in Tennessee.

The 5-Year Medicaid Look-Back in Tennessee: The Deal Killer

Here’s the most important fact that often gets glossed over:

Tennessee Medicaid has a strict 5-year look-back period.

That means:

• Assets transferred into a Medicaid trust are treated as uncompensated transfers
• Applying for nursing home Medicaid within five years triggers a penalty period
• There is no special exception just because the transfer was made to a trust

If someone is already elderly, already experiencing health issues, or realistically likely to need long-term care in the next few years, a Medicaid asset protection trust does not solve the problem.

In many cases, it actually creates a bigger one.

“Irrevocable” Means You’re Giving Up Control—for Good

To work at all, these trusts must be irrevocable.

That’s not legal jargon. It’s a permanent surrender of control.

Once assets are placed into the trust:

• You cannot access the principal
• You cannot undo the transfer
• You cannot change beneficiaries
• You are dependent on the trustee for decisions

For many middle-class Tennesseans, giving up control of their savings is far more dangerous than it is protective—especially when life, health, or family circumstances change.

This loss of control is rarely emphasized during seminars, but it is often the most consequential part of the plan.

“You Can Keep Your House” — With Important Caveats

Yes, in many Tennessee Medicaid trust plans:

• You can continue living in your home
• You may receive income if the home is rented

But this is where legal nuance matters:

• Rental income may count as Medicaid income if drafted incorrectly
• Sale proceeds may be locked inside the trust
• Trustee authority can limit flexibility
• Medicaid rules can—and do—change

What sounds straightforward in a seminar is often legally fragile in real life.

Why Clients Feel Burned by Medicaid Trusts

I regularly meet people who:

• Paid thousands for a Medicaid trust
• Still don’t qualify for Medicaid
• Can’t access their own money
• Were never told about alternatives
• Were sold certainty where none exists

That’s not careful estate planning. That’s product-driven planning.

When Medicaid Asset Protection Trusts Do Make Sense

To be clear, these trusts are not scams. They are just very narrow tools.

They may be appropriate when:

• Planning is done more than five years in advance
• The client is relatively healthy
• Asset preservation is the primary goal
• The loss of control is fully understood and accepted

That group is much smaller than seminar marketing suggests.

Trusted Counsel vs. Estate Planning Salesmanship

People often compare lawyers to mechanics.

A dishonest mechanic replaces parts you don’t need. An honest one tells you the truth—even when it costs them business.

At The Law Office of Garrett D. Haynes, “Trusted Counsel” means:

• Explaining what won’t work, not just what might
• Warning clients when a popular strategy is a poor fit
• Prioritizing clarity over fear
• Treating Medicaid and estate planning as legal analysis, not sales

Medicaid planning in Tennessee is complex, fact-specific, and unforgiving of shortcuts. Anyone promising a simple, one-size-fits-all solution is selling peace of mind—not legal accuracy.

The Bottom Line for Tennesseans

For most people in Tennessee:

• Medicaid asset protection trusts do not avoid the 5-year look-back
• They require giving up real control over assets
• They are frequently oversold to seniors
• More flexible and practical alternatives often exist

If you’re considering estate planning, Medicaid planning, or long-term care planning, make sure your advisor is offering honest legal advice—not just a polished pitch.

Because an honest mechanic—and an honest lawyer—is a rare gem worth keeping.

Trusted Counsel. Proven Results.
Mr. Haynes Explains