How to Set Up a Trust for a Parent: Steps, Costs and Medicaid Rules (2026)

Every trust has three roles, and one person can hold more than one of them:

• The grantor (also called the settlor or trustor) creates the trust and puts property into it. For a parent’s trust, that is your parent
• The trustee manages the property under the trust’s rules. With a living trust, your parent is usually their own trustee while they are well
• The beneficiaries receive the benefit: your parent during their life, then the people they name, often their children
• The successor trustee takes over if the trustee dies or can no longer manage. This is often an adult child, and it is the role that makes a trust so useful for later life

A trust is not a bank account. It is a written set of rules, and it only controls property that has been legally transferred to the trustee. That transfer, called funding, is a separate step from signing the document.

The main question is whether your parent wants to keep control (revocable) or needs protection from long-term care costs (irrevocable). You can’t have both in one trust.

The same steps apply whether your parent uses an online service or an attorney. The legal work is in steps 3 and 5; the family work is in steps 4 and 6.

1. 1

   Decide what the trust must do

   Avoid probate? Make it easy for a child to take over if memory fails? Protect savings from nursing home costs? Provide for a disabled relative? Write the goal down: it decides the type of trust and how much legal help you need.

2. 2

   Choose the type

   A revocable living trust for probate and incapacity planning; an irrevocable trust for Medicaid asset protection, or for a family member on benefits. Medicaid trusts must be drafted to your state’s rules, so use an elder law attorney.

3. 3

   Pick the trustee and a successor

   Your parent is usually the first trustee of a living trust. Name at least one successor, someone organized and trusted by the rest of the family. For an irrevocable Medicaid trust, your parent normally cannot be the trustee.

4. 4

   List every asset and how it is titled

   Bank and brokerage accounts, the home and any other real estate, life insurance, retirement accounts, vehicles and valuables, with the account numbers and who owns each one now. This list is what the funding step works from.

5. 5

   Have the document drafted and signed

   The grantor signs the trust, usually in front of a notary, and some states have extra signing rules. Your parent must have the capacity to understand what they are signing. Most plans add a pour-over will that moves anything left outside the trust into it at death.

6. 6

   Fund the trust

   Retitle bank and brokerage accounts in the trustee’s name, record a new deed putting the home in the trust, and assign other property. Retirement accounts usually stay in your parent’s name with updated beneficiaries, because retitling one can count as a taxable withdrawal. Ask before changing any of them.

7. 7

   Keep records and review

   Keep the signed trust, the funding records and a current asset list together. Review the plan after a death, a move to another state, a large change in savings or a diagnosis that may lead to long-term care.

There is no official price list, and fees vary by state and complexity. Published figures give a fair sense of the range:

• Online services: LegalZoom’s 2026 price guide puts DIY and online living trusts at about $400 to $1,000. Trust & Will’s trust plan starts at $499, plus a $49 yearly membership (its pricing page, October 2026)
• An attorney-drafted living trust: typically $1,500 to $4,000, and over $5,000 for complex estates, according to the same LegalZoom guide
• Hourly rates: the average will and trust lawyer charges around $370 an hour, according to Clio data cited in that guide. Many estate planning attorneys charge a flat fee for a standard trust package instead, so ask
• Medicaid asset protection trusts: these are drafted for your state’s Medicaid rules and usually cost more than a basic living trust. Get a written flat-fee quote that says what is included
• Funding: county fees to record a new deed, and sometimes a lawyer’s time to retitle accounts. Ask whether funding is included in the quote

An irrevocable trust also has running costs: it is a separate taxpayer, and a trust with gross income of $600 or more generally has to file its own federal return, Form 1041.

Federal law sets out how Medicaid treats a trust made with a person’s own money (42 U.S.C. § 1396p(d)):

• Revocable trust: everything in it counts as your parent’s resources. Payments to them count as income
• Irrevocable trust: any part that could be paid to your parent, under any circumstances, still counts. A trust that can pay your parent its income, but never its principal, protects only the principal
• The part that can never be paid back is treated as a gift made on the day it was put in the trust. That makes it subject to the 5-year look-back: moved in more than 60 months before a long-term care application, it is protected; moved in later, it can cause a penalty

Three kinds of trust are exceptions under the same law, and none of them is a way to keep savings for the family:

• A special needs trust for a disabled person under 65, which must repay the state from what is left at death
• A qualified income trust (often called a Miller trust), used in some states when a person’s income is just over the limit for nursing home Medicaid
• A pooled trust run by a nonprofit for disabled people, with each person’s money in a separate account

Timing is everything with a Medicaid trust. Started five years before care is needed, it can protect a home or savings. Started six months before, it mostly creates a penalty. If care may be needed soon, see an elder law attorney before moving anything, and read about exempt transfers and what happens to the house.

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Your parent has to set up a trust of their own money themselves, as grantor, and must understand what they are signing. You can help find the attorney, gather the asset list and come to the meetings, but the attorney will want to speak with your parent, often alone, to make sure the decisions are theirs.

If your parent can no longer sign, an agent under a power of attorney can create or fund a trust only if the power of attorney expressly grants that authority. Under the Uniform Power of Attorney Act, creating, amending or revoking a trust is one of the powers that must be written in (Utah Code § 75A-2-201). See our guide to the durable power of attorney. Without that power, the usual route is a court.

A trust fund for a parent, set up with your own money, is a different thing. If children pool money in a trust for a parent’s benefit, the trust is made with the children’s money, not the parent’s, so the Medicaid trust rules above don’t apply in the same way. How the money is paid out still matters: cash handed to a parent on SSI or Medicaid can reduce their benefits, which is why trustees usually pay bills and providers directly. Ask an elder law attorney to draft it.

If your parent can no longer manage, or dies, the successor trustee steps in under the terms of the trust, without a court case for the assets in it. In practice that means:

• Gathering the trust document, the death certificate or a doctor’s letter confirming incapacity, as the trust requires
• Showing banks a certification of trust (a short summary many states allow instead of the whole document)
• Keeping the trust’s money separate from your own, and a record of every payment
• After a death: paying final bills, filing tax returns, and distributing to the beneficiaries as the trust says, while keeping them informed

A trustee is a fiduciary, with the same duties as an agent under a power of attorney: act for the beneficiaries, not yourself, and keep good records. Assets outside the trust, and anything the will covers, still go through the executor.

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• Never funding it. A signed trust with nothing in it doesn’t avoid probate. Check every account title after signing
• Assuming a living trust protects against nursing home costs. It doesn’t. Only an irrevocable trust set up outside the look-back does
• Waiting too long for a Medicaid trust. Funding it within five years of applying can cause a penalty instead of protection
• Retitling a retirement account into the trust. This can count as a full taxable withdrawal. Change the beneficiary designation instead, with advice
• Naming one child without telling the others. Surprises are where family disputes, and legal fees, start. Share at least who the trustees are
• Forgetting to update it after a move to another state, a divorce or a death in the family

For a Medicaid trust, look for an attorney who practises elder law in your parent’s state: the National Academy of Elder Law Attorneys has a directory of members. For a simple living trust, an estate planning attorney or a reputable online service may be enough. If money is tight, LawHelp.org lists free legal aid by state.