Understanding Medicaid Asset Protection Trusts

Medicaid Asset Protection Trusts (MAPTs) upend every stereotype you have ever heard about trust fund babies. By nature, the beneficiaries of a MAPT are elderly, or at least old enough that they do not take it for granted that, six years from now, they will be healthy enough not to need nursing home care. They also tend to be less wealthy than the stereotypical owner of a trust. Truly wealthy people never even consider the possibility that they will need to apply for Medicaid to pay for their long-term care. Instead, they have enough savings and insurance that they can take their pick of nursing homes and assisted living facilities and stay there for as long as they need. MAPTs are ideal for people who own their houses and have some savings, but they do not have enough of a financial cushion to pay for nursing home care without selling their house or running out of savings. If you do not think that this describes you, consider that anyone might need nursing home care in the future and that Medicare only pays for 100 days of nursing home care, and that is only when Medicare is in a generous mood. For help establishing a Medicaid Asset Protection Trust, contact a Bronx estate planning lawyer.

How Do Your Finances Look When You Are Healthy, but Your Property Belongs to a Medicaid Asset Protection Trust?

A MAPT is an irrevocable trust, which means that the property in the trust, including your house and the trust’s bank account, do not legally belong to you. When you need nursing home care, this works to your advantage, because Medicaid determines your eligibility based on the assets you own, and you don’t technically own the assets that belong to the trust.

Of course, not owning anything doesn’t sound like much fun when you are healthy, but take heart. You can still live in your house once the MAPT owns it, because the trust instrument says so. Likewise, you can still get income from your MAPT’s bank account, just as you would from a retirement account. Medicaid does not consider retirement income when determining your eligibility, so life goes on much as it would for retirees who still legally own their property.

What Happens If You Are Late to the Party for Setting Up a Medicaid Asset Protection Trust?

Because of the five-year lookback rule, the best time to set up a MAPT is at least five years before you need to enter a nursing home, but it is never possible to be sure how long your good health will last. If you enter a nursing home and apply for Medicaid less than five years after transferring your property to a MAPT, it is not the end of the world. You might have to pay for the first few months of nursing home care out of pocket, or Medicaid might charge you penalties, but you will not be without nursing home care.

Schedule a Confidential Consultation With a Bronx Estate Planning Attorney

An estate planning lawyer can help you set up a Medicaid Asset Protection Trust.  Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.