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What is a Medicaid Asset Protection Trust?

On Behalf of | Jul 10, 2023 | Estate Planning, Medicaid

A Medicaid Asset Protection Trust (MAPT) is a financial instrument that protects your assets and can allow you to be eligible for Medicaid long-term care. It is an irrevocable trust. It is an estate planning tool that safeguards your assets from seizure and depletion. Medicaid cannot count your MAPT assets against you. You can designate beneficiaries in your trust. On top of that, you will also need a trustee. You must ensure you assign a professional and honest trustee.

Why your trustee matters

Medicaid cannot seize the assets in your MAPT, nor can Medicaid ask you to sell them to cover nursing home costs. However, all these advantages come with a price. Losing ownership of the assets in your trust is non-negotiable.

When establishing your MAPT, you assign a trustee to control and manage the assets in that trust. They will also allocate or distribute the funds and income from the trust. They should be neutral and hold no personal interests in your assets, as they must always consider your best interests. You can still receive income from investments you transferred to the trust. You can still live in your home even though you surrendered ownership by moving it to the MAPT. But you do not legally own them. The trustee becomes the active owner of the trust. As the grantor of the trust, you can still change the trustee at any time.

Time also matters

In New York, as in most other states, you must create your trust in advance to avoid the lookback period. The assets you put into the trust will not be part of your resource limit for Medicaid only if you create the trust and transfer your assets to it five years before you apply for the long-term care benefits. It would help if you weighed the benefits of creating a MAPT against other estate planning tools to see what works best for your future medical and financial needs.