Medicaid Asset Protection Trust

Speak with a Medicaid Asset Protection Attorney

Call NowEmail Now

Hi, I’m Paul.

A Medicaid Asset Protection Trust can be a saving grace for elderly people or their family members. This type of trust protects your assets from nursing home costs.

If you have questions, I’m here to help. There is no commitment and we provide free initial 15-minute phone calls. We look forward to meeting you.

See Also: Medicaid Caregiver Child Exemption

Medicaid Asset Protection Trust

Committed and Trustworthy. Get help with Medicaid Asset Protection.

A Medicaid Asset Protection Trust (MAPT) can be a great method to prevent your assets from being used to pay for nursing home care costs. In order to use MAPT, however, you must plan far in advance.

Unlike Medicare (which doesn’t provide for long-term care), Medicaid is what’s known as a “means-tested program.” In other words, you have to meet certain requirements, such as a small quantity of land or money or a low income (or both) for Medicaid eligibility. These requirements are set by the state.

The amount of assets you may have to qualify for Medicaid ranges from around $15,000 to as little as $2,000, depending on where you live. If you are not eligible for Medicaid, you may have to pay for long-term nursing care by yourself, and it can be incredibly expensive. Hence, why people attempt to find other methods to provide for their care. Converting countable assets to non-countable assets is one of the methods that will make you or your loved one qualify for Medicaid sooner.

Buying long-term care insurance is one alternative, but it is the most expensive way to provide for a stay in a nursing home or long-term care center.  If you do not qualify for Medicaid and you are turned down for long-term care insurance coverage or cannot pay, a Medicaid Asset Protection Trust (MAPT) is an excellent option.

When assets are placed in a MAPT, the Medicaid recipient can still use the resources (e.g., live in their home or receive a set monthly income). However, the trust rather than the recipient is the official owner of the resources, so the government doesn’t count those resources for Medicaid qualification purposes.

To give an example, if you set up a Medicaid Trust, it would mean that your elderly family member can live in the house and drive the vehicle held by the trust. However, your relative will not be told they have too many resources to qualify for Medicaid-covered long-term care. That is because the assets will not be in their name.

Another benefit of the MAPT is that the jointly-held resources are available for the care of the senior citizen, and they are also able to be passed on to other relatives in the event of the original member’s death. These assets are not held individually by any member, so they are not exposed to risk via anyone’s debts, obligations, divorces, etc.


Medicaid Asset Protection Trust Form: Basic Information

There are many Medicaid Asset Protection Trust form templates available online, but it is advisable to consult with experienced estate planning or elder law attorneys in order to set up your Medicaid Trust. Each person’s individual situation is different, and elder law attorneys can set up your trust for your specific needs.

Estate planning and elder law attorney Paul Black of The Law Office of Paul Black specializes in helping older clients plan for long-term care, qualify for benefits and nursing home Medicaid, plan for the possibility of illness or incapacity, handle retirement issues, as well as set up a Medicaid Trust.

Medicaid Trusts: What You Need To Know?

Medicaid Trusts, sometimes wrongly referred to as Medicare Trusts, are types of irrevocable trust. There are a few important things to be aware of if you are considering establishing these types of trusts.

  1. The Medicaid Trust must be properly worded, which an attorney can assist you with.
  2. You must choose one or more trustees to administer the trust. These trustees can be a relative, your adult children, or another trusted third party. Your spouse cannot be a trustee.
  3. You must establish the Medicaid Asset Protection Trust at least five years prior to entering a nursing home or applying for Medicaid long-term care. You also must move your assets into the trust at least five years prior. This is known as the “five-year look-back period.”

If nursing home care is quickly approaching and you have not yet established a MAPT, getting the aid of a law firm that specializes in elder law is imperative. In this case, you might have to take a different measure. The object here is to be eligible for Medicaid benefits at the earliest possible instant and to protect as many of these resources as possible.

If someone is getting older, cannot get long-term maintenance insurance, and wishes to plan ahead to protect their resources and property, the ideal alternative is to set up a Medicaid Asset Protection Trust. A MAPT is what’s known as an “income only” trust. It names someone other than you or your partner as the trustee, typically an adult child (or children), and restricts you to the income. Your principal assets must be inaccessible in order for them to be protected.

Since they continue to get their pension and Social Security checks directly, the person who establishes the MAPT is typically able to maintain their current lifestyle. The trust may sell and trade assets just like the individual could, and the individual has the right to change their trustees for any reason, so they retain some measure of control.

Assistance With Asset Protection Trusts.

Irrevocable Trust Medicaid Information

Talk With a Tax and Estate Planning Expert Today.

Establishing irrevocable trust in Medicaid will protect resources when the need for an elongated nursing home stay arrives. The ideal result of this strategy is to avoid spending all the money when admission to a long-term care center becomes necessary. It enables wealth to be preserved and passed on to another generation. However, strategies involving putting assets in irrevocable trusts should not be entered into lightly, especially if there are alternative protection plans available.

There are several benefits of a Medicaid Trust. Medicaid Trusts not only allow you to meet Medicaid’s asset limit without “spending down” assets but also protect the assets for the beneficiaries listed by the trustee. That means the assets in the trust are safe from Medicaid estate recovery. When a Medicaid applicant and recipient dies, the state where she or he lived and received Medicaid benefits tries to get reimbursement for which it paid for long-term care via the deceased’s estate. But, if the deceased’s home, real estate, and other assets are in Medicaid Trust, the state can’t collect them.

However, some states seek Medicaid estate recovery through probate. Even in these cases, there are ways to keep the Medicaid recipient’s home out of the probate procedure. In addition, if the home is in a life estate deed, it won’t go through probate because the deceased owns the home only while alive. Upon death, the ownership of the home in question is transferred to the beneficiary.

While the use of irrevocable trusts may be a powerful asset protection tool, there are a lot of priorities and conditions to equilibrium when analyzing whether it’s a wise strategy. Be sure to review the following factors and consult with a Georgia estate planning attorney before you make a choice.


Irrevocable Medicaid Asset Protection Trust: What to Consider?

  • Passing control to a trustee. The dynamic of the people involved in the trust should be one of the very first matters to consider. The person entering into the MAPT should be comfortable with how the assets will be utilized prior to his or her passing. It is recommended that people avoid entering an arrangement that is irrevocable unless they are confident the named trustee(s) share in their intentions for the trust assets.

  • Tax Concerns. Depending on your situation, you may need both an attorney and a financial planner or accountant to help establish your Medicaid Asset Protection so that you or your loved ones do not experience unfortunate tax effects. Here are a few tax-related questions to consider:

    • Will the trust beneficiaries be subject to capital gains taxes because contributions to trusts are deemed taxable presents?

    • Will the trust income be taxed at the original asset holder’s rate or the rate of the trust?

  • Potential impacts on care. It is important to realize that while the irrevocable trust Medicaid approach is designed to conserve wealth, it expects that customers will use the Medicaid program to pay for a portion of their care. This may have an effect on the choice and sometimes the quality of care the customer is going to get. It is a common fear that facilities have different accommodations for patients who pay with private funds and for those who utilize Medicaid, although this may or may not actually be true.

How is a Medicaid Asset Protection Trust different from a Revocable Living Trust?

A Medicaid Asset Protection Trust (MAPT) and a Revocable Living Trust serve different purposes in estate planning. MAPT is designed to preserve assets for future generations and help individuals qualify for Medicaid, especially when considering long-term care in assisted living facilities. Assets transferred to MAPT are not counted for Medicaid eligibility purposes, but there’s an income limit permitted. In contrast, Revocable Living Trusts primarily aim to avoid probate and offer no protection for Medicaid eligibility, as all the assets remain accessible to the grantor. Consulting an estate planning attorney is advisable for tailored advice on tax implications and establishing a properly drafted MAPT.

Medicaid Asset Protection Trusts: Dos and Don’ts

Medicaid Asset Protection Trusts can be complicated, so here is an easy list of Dos and Don’ts for handling your MAPT.

Contact a trustworthy attorney like Paul Black if you have questions or are considering establishing a MAPT.


Medicaid Asset Protection Trust Dos

  • Do make all transfers for your trust in a timely manner, at least 5 years before you apply for Medicaid or nursing care.
  • Do take income and wages from trust resources on at least a quarterly basis.
  • Use trust assets for payment of the real estate tax, homeowner’s insurance, maintenance, repairs, and home improvements.
  • When you would like to gift anything to your beneficiaries in the trust or change trustees, consult with your attorney.
  • Consult with your attorney once Medicaid benefits are needed, if the trustee recipient dies, or if the financial or personal circumstances change.
  • Do provide your homeowner’s insurance company and your accountant with information about the establishment of the MAPT.
  • Do be careful in selecting your trustee(s).


Medicaid Asset Protection Trust Don’ts

  • Don’t use it to cover personal expenses, utilities, or telephone bills.
  • Don’t use it to purchase an automobile.
  • Don’t take principal or capital gains out of trust resources, and don’t move your retirement accounts (IRAs and 401ks) into the trust.
  • Don’t make changes to or transfers into the trust without consulting your attorney.
  • Don’t allow beneficiaries to return any gifts made from the trust.

Get Started Today. Expert Help With Medicaid Asset Protection Trust.

How to Protect Money from Medicaid

Get Trust Assets Legal Advice.

Too few elderly adults know and understand their rights and options regarding long-term care. Learn how to protect money and assets from Medicaid today and avoid financial difficulty further down the road.

There are many reasons people try not to face this matter since it reminds everyone of their own mortality and can be very scary to consider. Some people think it won’t happen to them and they’ll somehow never need such care. But, the U.S. Department of Health and Human Services says that today’s 65-year-olds have nearly a 70% chance of needing some form of long-term care in their remaining years.

Among the strategies people use to attempt to protect money are income trusts, transfers of property, caregiver agreements, personal annuities, Medicaid planning, and more. Many of these strategies work in certain situations but aren’t well-suited for everybody.

MAPT, on the other hand, is a good overall option for protecting assets. It allows the elderly member to maintain their lifestyle, insulate their wealth for the future, maintain some control of their assets, and preserve the capital gains tax exclusion on the primary residence.


How to Protect Assets from Medicaid

Many changes come as life goes on and we grow older. Planning for your future care and the future of your family is just one of these changes. At the Law Offices of Paul Black, we help families make these decisions every day and go through the process.

Assets protection and protection of your property are things that you need to take seriously. Whether establishing a Medicaid Asset Protection Trust, setting up a will or living trust, or any other Medicaid purposes, we are here to help with all your elder law and estate planning needs. If you have tax concerns, you also need to hire a financial planner or an accountant. That way, you will prevent your loved ones from experiencing unfortunate tax effects.

Print Friendly, PDF & Email