The Cost of Control: How One Estate Plan Mistake Could Cost a Family Their Inheritance
Over my 25 years in estate and elder law, I’ve seen plenty of heartbreaking situations. But the ones that sting the most are the ones that were preventable, the cases where a client had a great plan, a solid strategy, and the right tools, but made a last-minute decision that unraveled the whole thing. Today, I want to tell you about one of those cases. It’s a cautionary tale. One that starts with a simple idea: control.
A Classic Medicaid Mistake: When “Control” Costs You Everything
Not long ago, a client came to me for help with long-term care planning. Like many of my clients, he was a smart guy. Thoughtful, careful, and concerned about protecting the family home. He had kids he loved and trusted, and he wanted to make sure the house, the family legacy, would be passed down without getting eaten up by long-term care costs or nursing home bills.
He came to the right place. At Monteforte Law, we’ve helped hundreds of families set up Medicaid Irrevocable Trusts, designed specifically to protect assets like the family home. Done right, these trusts keep the home safe from Medicaid liens and preserve it for the next generation.
And here’s the thing: These trusts already allow the person creating the trust - the parent - to be in control, by controlling the trustee. Though they can’t be their own trustee in that type of trust, the trustee is their puppet. Therefore, they can live in the home, maintain the property, pay the bills, and continue to “control” the home. The trust keeps the house safe, and the family gets to keep the asset. Simple. Clean. Legal. Bulletproof.
But this client? He was afraid. Not of nursing homes or long-term care costs. He was more afraid of giving up too much control. Even though his children were named as trustees - people he had already trusted with his life, his finances, and his estate - he still couldn’t shake the fear. What if something went wrong? What if they tried to kick him out? What if he needed more rights, more authority, more… control? And that’s where things started to go sideways.
The Dangerous Allure of the Life Estate
The client asked me, no, insisted, that we add life estate language to the deed. That phrase might sound harmless, maybe even comforting. After all, it means the parent keeps the legal right to live in the house until death. It’s a form of ownership, and it’s often used in estate planning. But in a Medicaid context, life estates are dangerous.
See, when you place a home into a properly structured Medicaid trust without a life estate, you take the house off the table. It’s no longer considered your asset after the five-year lookback period. MassHealth (Massachusetts Medicaid) can’t touch it. But when you add a life estate to the deed, MassHealth does consider that life estate to be an asset. A life estate has dollar value. And Medicaid has a formula to determine that value—based on the person’s age, life expectancy, and other factors. That value? It’s not just a number on paper. It’s a real asset, and it’s exposed to a real lien.
That’s exactly what happened here.
Dad’s Decision Creates a $100,000 Lien
We tried to talk him out of it. I explained that the trust already gave him the rights he wanted—he could live in the home, maintain it, pay the bills, even make decisions about upkeep and renovations. He controls the trustee, and the trustee has to do what they’re told. But he didn’t want to hear it. He wanted “extra protection.” He didn’t want to give up the symbolic (but legally unnecessary) power that the life estate offered. So, we included the life estate at his request.
Now, he’s in long-term care. The kids are trying to manage the assets. And they just got hit with a MassHealth lien for over $100,000 - plus interest. That lien is based on the value of the life estate. MassHealth is saying: “You may have had a trust. But because Dad kept a life estate, we still consider a portion of that house to be his. And now we want our money back.” And guess what? That $100,000 could force the family to sell the house.
They did everything right. The trust was set up properly. The kids served as responsible trustees. But that one extra clause - the life estate - may have undone it all. Now, I’m fighting that lien. We’re making legal arguments, citing case law, and pushing back. But I’m going to be honest with you: We might lose. MassHealth has the right to assert a lien based on the life estate’s value, and courts have backed them up in the past.
All of this because Dad didn’t trust the very plan he paid us to design.
The Real Meaning of Control
I’ve seen this pattern before. People think “control” means having their name on the deed. Or being able to sign something without asking permission. But in reality? That kind of control can cost you everything. When it comes to Medicaid, less “written” control equals more protection. When in practice, you still have the control anyway!
It’s a strange concept, but it’s critical to understand. If you want to keep your home, you have to be willing to let go of some legal ownership. That’s how the system works. The right trust allows you to live in the house, maintain it, and even control how it’s used - but you need to choose a trustee other than yourself. That’s how we protect it.
You control the trustee’s actions, so you still are in the driver’s seat. When you try to thread the needle - keeping exclusive control and avoiding long-term care costs - you risk falling into the trap that caught this family. And let me tell you: That trap is expensive.
Learn from This Family’s Pain
This isn’t about blame. The father in this story wasn’t a bad person. He was doing what he thought was best. He wanted to make sure he wouldn’t lose his home. He didn’t want to be a burden to his kids. And, ironically, he didn’t want to make any mistakes. But fear is a powerful thing. It makes us second-guess experts. It makes us add “just one more protection” that turns out to be the opposite. And in this case, fear may have just cost his family their home. You don’t have to make the same mistake.
If you’re thinking about protecting your assets from long-term care costs - if you’re worried about nursing homes, Medicaid, or passing down the family home - talk to someone who does this every day. Not your neighbor. Not your friend who read something online. Not even a general practice attorney. You need a specialist. Someone who understands the rules, the traps, the timelines, and the tools that actually work.
At Monteforte Law, we’ve seen it all. We know what works. And we know what doesn’t.
Don’t Let a Misunderstood Clause Undo Your Entire Plan
Estate planning isn’t about “covering your bases” by throwing in everything you’ve ever heard of. It’s about strategy. About using the right tools, in the right way, at the right time. A Medicaid trust is a powerful tool. But like any tool, it has to be used correctly. One misstep - like adding a life estate where it doesn’t belong - can undo the whole plan. And in this case, that one misstep may cost a family more than $100,000.
So if you’ve already set up a trust - great. But make sure it’s reviewed by an expert. If you’re thinking about setting one up, now is the time. Because the longer you wait, the more vulnerable your assets become. And if you’ve heard terms like “life estate” and think it sounds like a smart add-on, I urge you - talk to us first. Let us help you avoid the landmines.
Let us show you how to preserve your legacy, the smart way - not the risky way.
Book Your Free 3-Year Check-In or Strategy Session Today
At Monteforte Law, every client gets a free 3-year check-up. If you’re already a client, and you haven’t been in to review your plan recently - now is the time. We’ll make sure your plan still works, update anything that needs fixing, and steer you away from costly errors like the one in this story. And if you’re new to us? Book a Strategic Planning Session. We’ll walk you through our proven four-step process and help you protect what matters - without risking it all in the name of control.
Ready to protect your home the right way?
Don’t wait. Book your strategy session now or call us at 978-657-7437. The peace of mind is worth it.
