Using a MAPT as an estate planning tool

On Behalf of | Apr 8, 2021 | Estate Planning |

If you become incapacitated unexpectedly and your quality of living changes radically, your savings can dwindle within a few years. You may not qualify for Medicaid in New York if you have too many assets. As a result, your family may need to sell your home. You can take steps now to protect against this possibility and safeguard its value for your family members.

According to the American Council on Aging, Medicaid Asset Protection Trusts can protect your assets while allowing you to remain eligible for Medicaid benefits. Family trusts are different from MAPTs and typically don’t provide asset protection. You may have to “spend down” to meet the Medicaid asset requirements.

MAPT benefits

Medicaid Asset Protection Trusts are irrevocable. This means that once you transfer assets to them, you cannot move them out. It also means that you no longer own it; the trust does. Medicaid cannot count the contents as assets or use them to help cover costs. As a result, it can help you preserve your family home and other property. By transferring ownership to the trust, creditors also cannot touch it if you get into financial trouble or be part of a divorce settlement.

MAPT requirements

Planning must begin at least five years in advance of your need to take full advantage of Medicaid asset protection options. The best time to add a MAPT to your estate plan is when you are healthy and don’t foresee Medicaid in your near future. Medicaid’s look-back period is 60 months in New York. The goal is to prevent applicants from giving away assets or selling them under market value to meet the eligibility requirements.

Understanding how the Medicaid program works is essential for protecting your assets. Taking the time to develop a strategy that includes the family home can help you care for your family during a long-term illness and after your death.