RED BANK, NJ – Long-term care costs in New Jersey continue to place significant financial pressure on families, with recent survey data showing a semi-private nursing home room averaging approximately $12,775 per month and a private room averaging approximately $14,448 per month. New Jersey estate planning attorney Christine Matus of The Matus Law Group (https://matuslaw.com/irrevocable-trust-new-jersey-long-term-care/) is explaining how irrevocable trusts work under New Jersey law and how they can be part of a comprehensive strategy for Medicaid planning and asset protection for families throughout Monmouth County and across the state.

According to New Jersey estate planning attorney Christine Matus, an irrevocable trust is a legal arrangement that moves assets out of an individual’s name and into a trust managed by a designated trustee for chosen beneficiaries. Under the New Jersey Uniform Trust Code at N.J.S.A. 3B:31-43, a trust is presumed revocable unless its terms expressly state otherwise or clear and convincing evidence shows the settlor intended it to be irrevocable. Once funded, the grantor gives up control over those assets, and the trustee holds legal title in a fiduciary capacity and must manage the property according to the trust terms. “The tradeoff of giving up control is what makes this structure effective for Medicaid eligibility planning and estate tax reduction,” explains Matus. “Because the grantor no longer controls the assets, they are generally not counted as available resources for benefit eligibility purposes.”

New Jersey estate planning attorney Christine Matus notes that the financial eligibility requirements for New Jersey’s Managed Long-Term Services and Supports program are strict. As of 2026, the individual income cap for Title XIX-approved facility coverage is $2,982 per month, and the Medicaid resource limit for an individual remains $2,000. Assets placed into a properly drafted irrevocable trust that cannot pay income or principal to or for the benefit of the applicant are generally analyzed as unavailable resources under N.J.A.C. 10:71-4.11, subject to the transfer-of-assets rules and the five-year lookback period. Medicare does not pay for custodial nursing home care beyond a limited skilled nursing benefit, leaving families responsible for costs that can exceed $170,000 annually.

Attorney Matus emphasizes that the five-year Medicaid lookback period is one of the most critical factors in trust planning. The Deficit Reduction Act of 2005 standardized this period at 60 months for all transfers, including gifts to trusts and gifts to individuals. Before the DRA, the lookback for gifts to individuals was generally 36 months. If assets were transferred within the lookback window without receiving fair market value in return, Medicaid may impose a penalty period calculated by dividing the total value of transferred assets by the average monthly cost of care. “This is why families should consider establishing a Medicaid Asset Protection Trust well in advance of any anticipated need,” Matus adds. “Once assets are transferred into the trust and five years pass, those assets are generally no longer counted toward Medicaid resource limits.”

The Matus Law Group handles several types of irrevocable trusts commonly used in New Jersey. A Medicaid Asset Protection Trust holds assets outside the grantor’s countable resources, with neither income nor principal payable to or for the benefit of the grantor. A special needs trust provides for individuals with disabilities who receive Medicaid or Supplemental Security Income without disqualifying them from benefits. New Jersey regulations at N.J.A.C. 10:71-4.11 set out rules for excluded trusts, including those established by a parent, grandparent, legal guardian, or the court for a disabled individual under age 65. An Irrevocable Life Insurance Trust holds a life insurance policy outside the grantor’s estate so the death benefit is not included for federal estate tax purposes. Spendthrift trusts protect beneficiaries from creditor claims under N.J.S.A. 3B:31-36, and charitable remainder trusts provide income with tax deductions.

Matus points out that outright gifts to children carry risks that irrevocable trusts can avoid. Once assets are given directly to a child, those assets become legally theirs and may be subject to claims in the child’s divorce, creditor actions, or lawsuits. If the child predeceases the grantor, the assets may pass to unintended recipients. A trust maintains control over who benefits and under what conditions, provides legal accountability among family members, and reduces the chance of disputes. The same five-year lookback applies to outright gifts, so there is no timing advantage to gifting over a properly structured trust.

“The primary tradeoff with an irrevocable trust is its permanence, but New Jersey law does provide limited flexibility,” notes Matus. “Under N.J.S.A. 3B:31-27, modification or termination of a noncharitable irrevocable trust may be permitted with the consent of the trustee and all beneficiaries, provided the change is not inconsistent with a material purpose of the trust.” Choosing a qualified and reliable trustee is equally critical, as the grantor cannot serve as trustee in a Medicaid-focused trust, and poor management can cause serious problems for beneficiaries.

Almost any asset can be used to fund an irrevocable trust, including real estate, bank accounts, cash, stocks, bonds, and investment accounts. However, retirement accounts such as IRAs generally cannot be retitled to a trust during the account holder’s lifetime without triggering a taxable distribution, though the trust can typically be named as a beneficiary instead.

For families in New Jersey considering long-term care planning, consulting with an estate planning attorney can help determine whether an irrevocable trust fits within a broader strategy to preserve assets, maintain benefit eligibility, and provide for future generations.

About The Matus Law Group:

The Matus Law Group is a New Jersey-based law firm dedicated to estate planning, trust administration, and Medicaid planning. Led by attorney Christine Matus, the firm guides families through irrevocable trusts, special needs trusts, and long-term care strategies. The Matus Law Group has offices in Red Bank and Toms River and serves families throughout Monmouth County, Ocean County, and the state of New Jersey. For consultations, call (732) 785-4453.

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Company Name: The Matus Law Group
Contact Person: Christine Matus
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Phone: (732) 785-4453
Address:125 Half Mile Rd #201A
City: Red Bank
State: New Jersey 07701
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Website: https://matuslaw.com/monmouth-county-nj/