Medicaid Asset Protection Trusts 101

Long-term elder care is a concern for a strong majority of Putnam County residents, and very often, Medicaid is the best way for them to receive it. However, Medicaid is a means-tested program, meaning that if a person or couple makes too much money or has too many assets, they will not qualify. One tool that helps many qualify is known as a Medicaid asset protection trust (MAPT).

Insulates Assets From Medicaid Means Testing

When Medicaid assesses a person’s eligibility for Medicaid, they assess the person’s assets and income to determine if the applicant is truly in need. While many ‘spend down’ their estates in order to have little enough to qualify for the program, others use legal tools to place their assets in forms that are not quantifiable for Medicaid purposes. Trusts are one of the most common tools for this because of how flexible the format can be.

That said, there are limits. For example, it is common nowadays to use a trust for the purpose of estate planning – a revocable living trust, for example, is popular with those over age 65 because their assets are preserved, but they still have access to the trust’s income. However, these types of trusts are not compatible with Medicaid rules – in general, an asset protection trust must be irrevocable in order to not be counted by Medicaid, and it must have been created five years before applying for the program.

Positives & Negatives

As one might imagine, there are both positives and negatives around creating a MAPT. Aside from the obvious positive of insulating assets from Medicaid’s means testing, a MAPT also protects the assets in the trust if Medicaid seeks to ‘recover’ after a person’s passing. (If a person was over 55 or permanently institutionalized at the time of their passing, Medicaid has the right to try and “seek reimbursement” for certain costs from a deceased person’s estate.) The assets will go to the decedent’s chosen beneficiaries.

The main negative of having a MAPT is that it must be drawn up significantly before a person intends to apply for Medicaid. If created too close to the application date, placing assets in the trust technically violates the Medicaid “look-back” period. What this means is that while assessing a person’s application, Medicaid “looks back” 60 months (five years) – any improper gifts or transfers will result in penalties, usually a period of months where care will not be covered.

Call A Putnam County Asset Protection Attorney 

While no one likes to consider needing long-term care, it is a good idea to plan for the possibility as early as possible. A MAPT can keep your assets safe – a knowledgeable Putnam County asset protection attorney from Meyer & Spencer, PC can help answer any questions you may have about the process of its creation. Call our office today to schedule a consultation.

Source:

omig.ny.gov/casualty-estate-recovery-estate-recovery