Nursing homes do not take people's assets. If you are in a nursing home and you run out of money, they either kick you out, or you qualify for Medicaid and they keep you as a Medicaid patient.
In order to qualify for Medicaid, (which is a Federal welfare program, which the states contribute to and administer), the patient can have only so much in assets. Certain assets, such as a home and a car, are exempt. Assets held in a trust, even if they would otherwise be exempt, are not.
Since assets held in a trust are countable, and since trust grantors generally have full access to assets in trusts, living trusts are not a means of qualifying for government assistance.
There are certain types of irrevocable trusts and special needs trusts that WOULD allow the patient to qualify for Medicaid. Some of these would be subject to a five year look back period, and some would be subject to reimbursement of any Medicaid benefits actually paid out.
If you or a loved one is in need of long term care, then you should consult with an attorney as soon as possible, to determine how best to proceed. It is often preferable to maintain the patient in an assisted care facility, even if it means exhausting their funds, as opposed to qualifying them for Medicaid, in order to preserve an inheritance. What is best in your situation is what you need to discuss with the attorney.
Best of luck to you!
*** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state.