How to Plan for Long-Term Care: Legal Considerations in Texas
Planning for long-term care is a critical step in promoting financial security, personal dignity, and quality of life as individuals age or face health challenges. In Texas, where the aging population is growing rapidly, understanding the legal considerations for long-term care planning is essential.
At Pakis, Giotes, Burleson & Deaconson, P.C., our attorneys offer a thorough understanding of the legal aspects involved, including estate planning, Medicaid eligibility, guardianship, advance directives, and other important matters under Texas law. Based in Waco, Texas, we proudly serve clients in Temple, Belton, Coline, and throughout Bell County.
By addressing this topic proactively, individuals and families can make informed decisions to protect their assets and make sure that their care preferences are honored.
Understanding Long-Term Care
Long-term care encompasses a range of services designed to assist individuals with daily activities over an extended period. These services may include in-home care, assisted living, nursing home care, or adult day care.
In Texas, the need for these services is growing as the population ages and life expectancy increases. The Texas Health and Human Services Commission reports that over 4.5 million Texans are aged 60 or older, a figure projected to rise significantly by 2030.
Legal planning for long-term care makes sure that individuals can access these services while preserving their financial stability and personal autonomy.
Why Legal Planning Matters
Legal planning for long-term care addresses several critical issues:
Asset protection: Safeguarding personal and family assets from depletion due to high care costs.
Care preferences: Making sure that an individual’s wishes for medical treatment and care are respected.
Financial eligibility: Understanding programs like Medicaid to cover long-term care costs.
Decision-making authority: Designating trusted individuals to make decisions if incapacitation occurs.
Avoiding legal disputes: Minimizing family conflicts or legal challenges over care and finances.
Texas law has specific tools and mechanisms to address these concerns, but the intricacy of the law requires careful planning and, often, professional guidance.
Wills and Trusts
A will makes sure that an individual’s assets are distributed according to their wishes after death. However, for long-term care planning, a will alone is insufficient, as it doesn’t address incapacity during life. A trust, particularly a revocable living trust or an irrevocable Medicaid trust, can be more effective.
Revocable living trust: This allows individuals to manage their assets during their lifetime and transfer them seamlessly upon death or incapacity. It can designate a successor trustee to manage assets if the individual becomes unable to do so.
Irrevocable Medicaid trust: Designed to protect assets from being counted toward Medicaid eligibility, this trust removes assets from the individual’s control, placing them under a trustee’s management. In Texas, Medicaid’s “look-back” period for asset transfers is five years, meaning transfers into an irrevocable trust must occur well in advance of applying for Medicaid.
Your attorney can provide more information on how each type of trust works.
Durable Power of Attorney
A durable power of attorney (POA) is a document that appoints an agent to manage financial and legal affairs if the individual becomes incapacitated. In Texas, the POA must explicitly state that it remains effective during incapacity to be considered “durable.”
This document allows the agent to pay bills, manage investments, and make decisions aligned with the individual’s long-term care needs.
Lady Bird Deed
Exclusive to Texas, a Lady Bird Deed (or enhanced life estate deed) enables individuals to maintain control of their home during their lifetime while naming a beneficiary to inherit the property after their passing, avoiding probate. This tool helps protect the home from Medicaid estate recovery while allowing the owner to live in or sell the property as needed.
Medicaid Planning
Medicaid is a joint federal and state program that covers long-term care costs for eligible individuals with limited income and assets.
In Texas, Medicaid is administered by the Texas Health and Human Services Commission and is a vital resource for covering nursing home and certain in-home care costs. However, qualifying for Medicaid requires careful planning due to strict eligibility rules.
Income and Asset Limits
As of 2025, Texas Medicaid imposes the following general eligibility requirements for long-term care:
Income Limit: For an individual, the monthly income cap is approximately $2,829 (subject to annual adjustments). Income above this limit may require the creation of a Qualified Income Trust (QIT), also known as a Miller Trust, to redirect excess income into a trust to meet eligibility.
Asset Limit: Individuals may have no more than $2,000 in countable assets (excluding exempt assets like a primary residence, one vehicle, and personal belongings). For married couples, the non-applicant spouse (community spouse) may retain a Community Spouse Resource Allowance (CSRA), which is approximately $154,140 in 2025.
The Five-Year Look-Back Period
Texas Medicaid reviews asset transfers made within five years of applying for benefits. Transfers for less than fair market value (e.g., gifting assets to family members) may result in a penalty period during which Medicaid won’t cover long-term care costs.
To avoid penalties, individuals may transfer assets into an irrevocable trust or gift them well before the five-year window.
Medicaid Estate Recovery
Under Texas law, the Medicaid Estate Recovery Program (MERP) allows the state to recover costs paid for long-term care from an individual’s estate after their death. This typically applies to individuals aged 55 or older who received Medicaid-funded nursing home or home-based care.
To minimize recovery, individuals can use tools like the Lady Bird Deed or irrevocable trusts to protect key assets, such as the family home.
Spousal Impoverishment Protections
Texas law provides protections to prevent the impoverishment of a community spouse when the other spouse requires long-term care. The Minimum Monthly Maintenance Needs Allowance (MMMNA) confirms the community spouse has sufficient income for living expenses, set at approximately $3,853.50 per month in 2025.
The CSRA also allows the community spouse to retain a portion of the couple’s assets.
Advance Directives
Advance directives are legal documents that outline an individual’s healthcare preferences and designate decision-makers in case of incapacity. In Texas, there are two primary types of advance directives for long-term care planning.
Medical power of attorney: A Medical Power of Attorney (MPOA) designates an agent to make healthcare decisions on behalf of the individual if they’re unable to communicate. This document is critical for making sure that long-term care decisions, such as whether to pursue in-home care or enter a facility, align with the individual’s wishes.
Directive to physicians (living will): A Directive to Physicians, often referred to as a living will, outlines an individual’s wishes regarding life-sustaining treatments in cases of terminal or irreversible conditions. In Texas, this document enables individuals to specify whether they want treatments such as artificial nutrition or ventilation to be withheld or discontinued.
Do not resuscitate (DNR) order: A DNR Order instructs healthcare providers not to perform cardiopulmonary resuscitation (CPR) in the event of cardiac or respiratory arrest. In Texas, a DNR must be signed by a physician and the individual (or their agent) to be valid.
Advance directives, including Medical Power of Attorney, Directive to Physicians, and DNR Orders, are essential tools in Texas for confirming an individual’s healthcare preferences are honored in long-term care planning.
Guardianship
If an individual becomes incapacitated without a POA or advance directives, a court may appoint a guardian to make decisions on their behalf. In Texas, guardianship is a legal process overseen by probate courts, and it can be costly and restrictive. There are two main types:
Guardianship of the person: Manages healthcare and personal decisions.
Guardianship of the estate: Manages financial and property matters.
To avoid guardianship, individuals should establish a durable POA and MPOA early in their planning. Texas law also allows for supported decision-making agreements as an alternative to guardianship, enabling individuals with disabilities to retain decision-making authority with assistance from a trusted supporter.
Long-Term Care Insurance
While not a legal document, long-term care insurance is a financial tool with legal implications. These policies can cover costs for in-home care, assisted living, or nursing homes, reducing reliance on Medicaid.
In Texas, insurance policies are regulated by the Texas Department of Insurance, and consumers should review policy terms carefully, including coverage limits, elimination periods, and inflation protection. Consulting an attorney can make sure that the policy aligns with other legal plans, such as trusts or Medicaid strategies.
Veterans’ Benefits
Veterans and their spouses may qualify for long-term care benefits through the VA Aid and Attendance program, which provides financial assistance for in-home care, assisted living, or nursing home care.
Eligibility requires wartime service, limited income and assets, and a medical need for assistance. In Texas, veterans can work with a Veterans Service Officer to traverse the application process, which may complement Medicaid planning.
Contact an Estate Planning Attorney
Planning for long-term care in Texas requires a proactive approach to legal and financial preparation. Using tools like trusts, advance directives, and Medicaid planning, individuals can protect their assets, make sure their care preferences are honored, and maintain financial stability. At Pakis, Giotes, Burleson & Deaconson, P.C., we serve residents of Waco, Temple, Belton, and Bell County. Call today to schedule a consultation.