One of the most common questions we hear from clients is: "How do I protect my home and savings if I ever need nursing home care?" The answer, in many cases, involves a Medicaid Asset Protection Trust — also known as a MAPT or an irrevocable Medicaid trust.
What Is a Medicaid Asset Protection Trust?
A Medicaid Asset Protection Trust is a type of irrevocable trust specifically designed to hold assets — often including your home — outside of your countable assets for Medicaid purposes. When assets are properly transferred into this trust at least five years before you apply for Medicaid, those assets are generally not counted against you when you apply for Medicaid to cover nursing home costs.
How Does It Work?
When you create a MAPT, you transfer ownership of your assets — most commonly your home, but sometimes other real estate, investments, or savings — into the trust. You name a trustee (often an adult child) to manage the trust assets, and you name beneficiaries (often your children) who will receive the assets when you pass away.
You can continue to live in your home after transferring it to the trust, and any rental income or dividends generated by trust assets can typically be paid to you during your lifetime.
The critical rule: the transfer must occur at least five years before you apply for Medicaid. This is the "five-year look-back period." Transfers made within five years of applying for Medicaid may result in a penalty period — a period of ineligibility.
Who Should Consider a MAPT?
A Medicaid Asset Protection Trust may be appropriate if you:
- Are in good health and want to plan ahead for the future
- Own a home and want to protect it for your children
- Have savings or investments you want to preserve
- Are at least five or more years away from needing nursing home care
Because of the five-year look-back, early planning is essential. A MAPT created today may protect assets from a nursing home stay that begins five years from now.
Important Considerations
A MAPT is irrevocable — meaning you cannot take the assets back once they are transferred in. You give up direct control and ownership of those assets. This is a significant decision that should not be made without careful consideration and legal guidance.
Additionally, if the home is later sold while in the trust, there may be capital gains tax implications that would not apply if you owned the home outright at death. Your estate planning attorney and tax advisor should discuss these tradeoffs with you.
New York-Specific Rules
New York Medicaid law has its own specific rules regarding MAPTs, including requirements about what income can be paid to the grantor and what distributions the trustee can make. It's important to work with a New York elder law attorney who is familiar with the specific rules in your county.
Take Action Now
If you are concerned about protecting your home and savings from nursing home costs, now is the time to plan. The sooner a MAPT is established, the sooner the five-year clock begins to run.
Contact the Law Office of Martin Hersh, Esq. for a free initial consultation to discuss whether a Medicaid Asset Protection Trust makes sense for your situation.
This article is for general informational purposes only and does not constitute legal advice. Laws change frequently. Consult with a qualified New York elder law attorney for advice specific to your circumstances.