Using Medicaid Asset Protection Trusts to Transfer Assets
Assets into a Medicaid Asset Protection Trust are retitled to the name of the trust and are no longer in your name, allowing you to qualify for Medicaid following a certain time period. For nursing home care, this period is called a ‘lookback’ that takes five years for eligibility. Lookback rules for home care benefits differ by state. New York has no lookback for Medicaid home care until the year 2024, which presents a unique window of opportunity to protect assets within a MAPT. [refer to this link to learn more about the lookback]
A MAPT is a type of irrevocable trust. However, It’s important to note that you can change the trustee or beneficiaries at any time, and with the consent of the beneficiaries the trust can be revoked. A benefit of the Medicaid Asset Protection Trust is that you do retain access to the funds inside it in two ways: (1) You can receive income generated by the trust, and (2) your trustee and beneficiaries can take actions that move funds out of the trust for your benefit.
What Can You Place in a Medicaid Asset Protection Trust?
As part of your Medicaid planning strategy, you can place many types of assets in a MAPT, including:
- Checking and savings accounts
- Stocks and bonds
- Mutual funds
- Certificates of deposit
- Real estate that is not your primary residence
- In most states including New York, your home
Benefits of Medicaid Asset Protection Trusts
Medicaid Asset Protection Trusts offer several benefits to individuals planning to apply for Medicaid:
- MAPTs preserve generational wealth, safeguarding assets for family members.
- After you pass away, the state cannot take your assets from your beneficiaries to reimburse them for your long-term care, as MAPTs avoid probate.
- Since nursing home and home care fees can be exorbitant, MAPTs can save your family money, as they let you qualify for Medicaid once the lookback period is satisfied
- Control and Security: you can replace the trustee or beneficiaries at any time
- It can be designed in such a way that you get significant tax advantages
- You keep your star exemption, you can sell your home, you get the capital gains exclusion, you get a step up in basis for the heirs on any appreciated assets.
You should consult with a Medicaid asset protection attorney for details on how to properly structure a MAPT in this environment and for other quick tips on your New York Medicaid Asset Protection Trust. Speak with an elder law attorney at Pierro, Connor & Strauss to learn about how using a Medicaid Asset Protection Trust could help you plan for your future long-term care needs.
