Medicaid Asset Protection Trusts

A Medicaid Asset Protection Trust (MAPT) can be an important estate-planning tool for individuals who want to protect certain assets while potentially qualifying for Medicaid in the future. Medicaid is a government program that can help pay for long-term nursing-home care, but eligibility is based partly on financial circumstances. Nursing-home care can be extremely expensive, families often consider strategies to preserve assets for spouses, children, or other beneficiaries.

Woman’s Hand Placing Last Alphabet Of Word Trust Over Wooden Block

A MAPT is an irrevocable trust. When assets are transferred into the trust, the person creating the trust gives up direct ownership and control of those assets. The trust is managed according to its terms, and the assets may eventually pass to designated beneficiaries. Due to the fact that the assets may no longer be considered personally owned by the grantor, they can potentially receive protection when Medicaid eligibility is evaluated.

However, Medicaid planning has important rules and limitations. Transfers made before applying for Medicaid are subject to a five-year look-back period. Certain transfers during this period may result in a penalty period during which Medicaid will not pay for long-term-care expenses.

For these reasons, Medicaid asset protection planning should be done well before long-term care is needed. An attorney experienced in Medicaid and elder-law planning can help determine whether a trust is appropriate and structure it according to applicable state and federal requirements. Ultimately, careful planning can help individuals prepare for potential long-term-care costs while preserving assets for their families.