Medicaid Asset Protection Trusts | MAPT | Pierro, Connor, & Strauss, LLC

For individuals and families concerned about the soaring costs of long-term care, legal planning with a Medicaid Asset Protection Trust (“MAPT”) can present an opportunity to become eligible for home care or nursing home benefits through the federal program Medicaid.

Unless you have the funds to pay out-of-pocket for long-term care at $180,000 per year or more, or have previously purchased long-term care insurance, the MAPT presents an opportunity to qualify for services without spending down life savings to impoverishment. The attorneys at Pierro, Connor & Strauss can customize this Trust both for individuals facing a chronic illness who need long-term care immediately and for people who are currently healthy but want to preserve assets in the event that Medicaid is needed in the future.

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How Does a MAPT Work?

At the point in time when you apply for Medicaid this trust is not going to be counted as part of your assets. That’s why it’s called an Asset Protection Trust. You are moving assets into the trust to protect them in the event that you need Medicaid to pay for long-term care.

Medicaid imposes strict rules on how much money and assets an applicant can have, which differs by state. However, most people have more income and resources than Medicaid allows. This scenario is where a “MAPT” can step in, guided by elder law attorneys who are experienced in customizing the design to each client. When certain assets such your home and other property, cash, stocks, and other qualifying funds are transferred into a Medicaid Asset Protection Trust (MAPT), Medicaid will not count them toward its resource limit.

Fortunately, retirement accounts are not factored in to your eligibility for Medicaid. 401(k)s and 403(b)s are exempt and remain outside the trust.

What About My Income?

If your income – commonly coming from pension, social security and investment distributions – exceeds the amount Medicaid allows, a “Pooled Trust” can be created for that excess amount in order to become eligible. This legal planning tool does not involve the Medicaid Asset Protection Trust but can be a powerful strategy to discuss with your attorney.

A smiling senior couple using a white laptop at home looking at mapt

Creating a Medicaid Asset Protection Trust

Three parties are involved in a MAPT: the grantor, trustee, and one or more beneficiaries. When you create the trust, you become the grantor: the person(s) who transfers assets into the trust. You name someone other than yourself or your spouse as the trustee who, as your fiduciary, must manage the trust in your best interests. You also designate one or more beneficiaries to ultimately receive assets from the Trust when you pass away.

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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 expected until the year 2026, which presents a unique window of opportunity now to protect assets within a MAPT.

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 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.

Life Happens…..Are You Prepared?

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New York Medicaid Asset Protection Trust