If you need long-term care in the future, consider using a Medicaid Asset Protection Trust.
Medicaid, a joint state and federal program, provides health coverage to low-income individuals of all ages. Qualifying for Medicaid requires meeting strict income and asset limits, which vary by state and the type of Medicaid coverage sought.
These limits pose a significant hurdle for many, especially those needing long-term care. According to an ElderLawAnswers article, this is where Medicaid Asset Protection Trusts (MAPTs) come into play. MAPTs offer a legal avenue to protect assets, while preserving eligibility for Medicaid benefits.
How Medicaid Asset Protection Trusts Work
A MAPT is an irrevocable trust established during your lifetime that transfers ownership of assets to a trust, so Medicaid excludes them from the resource limit during eligibility qualification. Once transferred, you no longer own the assets directly, which helps you to meet Medicaid’s eligibility criteria. Appoint a trustee other than yourself to manage the trust and to transfer the assets, such as real estate or stocks, into the trust’s name correctly.
Key Considerations
- Timing is Crucial: A MAPT must be created and funded more than five years before you apply for Medicaid, as with Medicaid’s 60-month lookback period applies to these trusts. Assets transferred into the trust within this period may penalize your Medicaid eligibility.
- Living Arrangements: Transferring your home into a MAPT doesn’t mean you have to move out. You can still reside in your home, although the trust technically owns it.
- Income and Benefits: You can receive income from the trust’s assets. However, this income may affect your Medicaid eligibility.
Key Takeaways
- Asset Protection: A MAPT can protect assets, including bank accounts, stocks, real estate, and more, from being counted towards Medicaid’s resource limits.
- Irrevocability: Once established, a MAPT cannot be revoked. The creator of the trust can have limited control over who receives the trust assets at death if the trust is properly drafted. The assets within the trust are permanently shielded from Medicaid consideration.
- Estate Recovery Avoidance: Properly structured, a MAPT can protect your home and other support from Medicaid’s estate recovery efforts after your death.
- Professional Guidance is Essential: Given the complexity and potential costs associated with MAPTs, consult with an elder law attorney to confirm whether one is appropriate for your situation.
Conclusion
Medicaid Asset Protection Trusts are a valuable strategy for individuals looking to qualify for Medicaid without sacrificing their assets. Work with an attorney to understand how these trusts work and the financial considerations involved so you can make informed decisions about your long-term care planning.
Reference: ElderLawAnswers: What Are Medicaid Asset Protection Trusts?
