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If you’ve been following our blog, you’ve learned that—with a little planning—even middle-class American homeowners can qualify for Medicaid coverage. You’ve started exploring your options, and maybe you’ve even heard of Medicaid Asset Protection Trusts. This powerful legal tool could help you gain the long-term care coverage you’ll likely need in old age…but the sooner you start planning, the better.

What You (Really) Need to Know About Medicaid Asset Protection Trusts

Medicaid Asset Protection Trusts (MAPT) are a special type of irrevocable trust designed to shield assets from being counted as part of your Medicaid eligibility determination. When properly designed, they allow you to transfer assets out of your name, and remove them from your personal ownership. On paper, you cease to be the owner of whatever you place in the trust, while still retaining certain benefits and some control over everything you’ve worked a lifetime to earn. The primary objective with a MAPT is to protect your life’s work from being depleted to pay for nursing home costs (which can be exorbitant).

How Medicaid Asset Protection Trusts Work

When a MAPT is created, the individual—known as the grantor—transfers assets into the trust. The grantor names a trustee (either a trusted loved one or professional advisor) to manage the trust and make distributions according to the trust’s terms, which you set. By transferring assets into the trust, you, the grantor, effectively surrender ownership, yet retain control by virtue of determining how the assets can and cannot be used. Since Medicaid has a look-back period of five years, all of this needs to happen far in advance of when you anticipate needing Medicaid coverage. This will help you avoid penalties.

When to Get Started on Your Medicaid Asset Protection Trust

There are two common situations in which you might need a MAPT:

  1. Planning for long-term care: If you anticipate the need for long-term care in the future, creating a MAPT early helps safeguard your assets and avoid penalties.
  2. Preserving family wealth: By establishing a trust, you protect your assets from being spent down to cover nursing home expenses, ensuring that your loved ones can inherit your wealth…and not the nursing home.

A Medicaid Asset Protection Trust provides a strategic means to protect your assets while ensuring you remain eligible for Medicaid benefits. By transferring your assets into this type of irrevocable trust, you safeguard your life’s work for your family’s future benefit, while making sure you have access to the care you need. If you’re considering establishing a MAPT, it’s important to work with an experienced estate planning attorney who can steer you clear of pitfalls and penalties that are otherwise hard to avoid.

Contact Miller Estate and Elder Law

Looking to learn more? Do not hesitate to give us a call at (256) 251-2137 or contact us via the brief form below.

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