Nursing homes sometimes offer residents the option of setting up a trust fund—a financial account into which money can be deposited to pay for everything from care expenses, to incidentals, such as haircuts or items from an in-house gift shop.

But a recent investigation by USA TODAY reveals that these accounts may not provide the safest option for residents to store their cash. In the span of just three years, over 1,500 citations have been handed out to nursing homes for improper use of trust fund finances. The grievances range in severity from poor management and oversight, to outright theft of tens of thousands of dollars.

For concerned family members, entrusting even a small sum of a loved one’s money to a nursing home can be a difficult decision to make, particularly in light of these recent discoveries. But there are concrete steps you can take to prevent a your elderly loved one from becoming a scam victim.

To help ensure your family member's finances are safe and well-managed, some important things to keep in mind about nursing home trust funds are listed below.

  1. A Resident Doesn't Have to Have One
    It is against the law for a nursing home to require a resident to set up a trust fund account. This is true, regardless of whether your loved one is on Medicaid, Medicare, receives monthly Social Security checks, or utilizes a combination of financial resources to pay for care. The list of nursing home resident rights put forth by the Centers for Medicare and Medicaid (CMS) explicitly states that individuals are free to manage their money however they wish. Thus, your loved one can opt to set up a trust fund, but they can’t be forced to.
  2. Accounts Can Earn Interest
    The typical nursing home trust fund account shares many similarities with a regular bank account. Depending on the requirements of a given facility, your loved one may be eligible to earn interest on the money they deposit. Nursing homes are also required by law to regularly update residents on the status and activity of their accounts.
  3. It’s Still Your Loved One’s Money
    Setting up a trust fund with a nursing home is not equivalent to turning control of your loved one’s money over to the facility itself. The money in the account remains in the possession of the account holder and residents’ finances must be kept separate from the facility’s operating funds. The resident (or someone they designate to act financially on their behalf) is the one who decides what to do with the money in the account.
  4. You Have a Right to Be Kept in the Loop
    Because the money placed in a nursing home trust fund still belongs to your loved one, they have the right to know how the facility keeps track of it. Effective monitoring by the nursing home itself can cut down on the chances that funds in the accounts will be misused or stolen by unscrupulous employees. When considering depositing money with a nursing home, ask how often they perform internal audits on trust fund accounts. This will give you a better sense for how safe your loved one’s money will be.
  5. Facilities Must Take Steps to Safeguard Residents’ Money
    In order to provide financial protection to residents who set up trust fund accounts, many states require nursing homes and assisted living facilities to purchase Patient Trust Surety Bonds. These documents act as a type of insurance, containing language that dictates how the facility must go about managing the funds deposited by its residents. In order to receive a surety bond, the facility must submit to a vetting process that includes a credit check. If a nursing home reneges on the obligations outlined in the bond document, residents can file a claim and may be eligible to be reimbursed for any money lost.
  6. Do Your Homework Before Making a Decision
    Medicare and Medicaid-certified nursing homes are subject to regular investigation by both state and federal organizations. Each facility’s results are posted on Medicare’s Nursing Home Compare website. While a solid ranking offers no guarantees, researching a facility’s reputation is a critical first step towards finding the right nursing home for your loved one and it may make coping with a nursing home decision a bit easier.
  7. What Happens When a Loved One Passes
    If your loved one dies while in a nursing home and they still have money remaining in their trust fund account, the facility must surrender those funds to the individual managing the deceased’s estate within 30 days.