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A Medicaid Asset Protection Trust (MAPT) is a legal tool used in Medicaid planning to protect assets from being considered for Medicaid eligibility and help preserve those assets for the individual’s beneficiaries. The primary purpose of a MAPT is to shield certain assets from being counted towards the individual’s asset limit, allowing them to qualify for Medicaid benefits to cover long-term care costs while still preserving assets for their loved ones.

Here’s how a Medicaid Asset Protection Trust generally works:

  1. Creation of the Trust: The individual (grantor) establishes the Medicaid Asset Protection Trust and transfers assets, such as real estate, investments, or cash, into the trust. Once the assets are transferred, they no longer belong to the grantor and are no longer counted as part of their estate for Medicaid eligibility purposes.
  2. Irrevocability: A Medicaid Asset Protection Trust is typically irrevocable, meaning the grantor cannot undo or revoke the trust once it is established. This ensures that the assets are effectively removed from the grantor’s estate for Medicaid qualification.
  3. Trustee Selection: The grantor designates a trustee, who can be an individual, a professional trustee, or a corporate trustee, to manage and administer the trust’s assets on behalf of the beneficiaries.
  4. Look-Back Period: To prevent individuals from transferring assets into a trust solely to qualify for Medicaid, there is a Medicaid “look-back” period. Any asset transfers made within a specific time frame before applying for Medicaid benefits may be subject to penalties and delays in eligibility.
  5. Medicaid Eligibility: Once the look-back period has passed, the assets in the Medicaid Asset Protection Trust are not considered as part of the grantor’s countable assets for Medicaid eligibility. This allows the grantor to qualify for Medicaid benefits to cover nursing home or long-term care costs while the trust’s assets are protected for the beneficiaries.

It’s important to note that while a Medicaid Asset Protection Trust can be an effective tool in Medicaid planning, it is not a quick fix for immediate Medicaid eligibility. It requires careful planning and consideration of individual circumstances. Additionally, the rules and regulations regarding Medicaid and asset protection trusts can vary by state, so it’s crucial to work with a qualified elder law attorney or estate planning attorney. Lepore Law can help. We can ensure compliance with applicable laws and tailor the trust to meet your specific needs and goals. Call our office at 718-354-8646 and we would be happy to schedule a consultation.