As we grow older, our care needs and circumstances change. We often require expensive care as we age and need the assistance of vital government programs like Medicaid to take care of certain medical costs. Of course, our financial resources are often limited in retirement.
So, how can you preserve Medicaid eligibility even if you own valuable assets or have a high net worth? This is where a Medicaid Asset Protection Trust (MAPT) comes into play. You use the trust to lower your net worth which ultimately opens up an opportunity to receive Medicaid for things like in-home care or nursing home services.
Establishing a Medicaid Asset Protection Trust
A Medicaid Asset Protection Trust (MAPT) is an “income only” trust that designates a trustee other than you or your spouse. You are able to remove assets from your estate, preventing Medicaid from considering those assets in the calculation of your eligibility.
While you may no longer technically own these assets, you can still earn income from them, such as the equity in your home or investments. You are not, however, able to sell these assets for profit once they are within the trust.
By creating a MAPT, you can effectively shield your assets from Medicaid’s strict criteria, ensuring that you are better prepared for potential long-term care needs without sacrificing your financial stability. It’s important to have a long-term plan for these assets before you transfer them.
Getting Ahead of the Medicaid Look Back
Medicaid doesn’t simply evaluate your financial situation at the time of your application. It considers the last five years of your financial history. If, at any point during this period, you were ineligible for Medicaid due to your income or asset value, your application could be denied. If it’s not denied, you may simply be expected to pay without the assistance of Medicaid until you reach the point where you have been eligible for a full five years. This underscores the importance of proper timing when it comes to transferring assets into a Medicaid Asset Protection Trust.
To qualify for Medicaid, the assets must be transferred at least five years before you apply. There is, however, an exception known as the Child Caregiver Exception, which allows you to transfer your home to an adult child who has been living with you and caring for you for at least two years before you apply.
Understanding these timing elements is crucial for properly executing and benefiting from a Medicaid Asset Protection Trust. Failing to plan ahead could result in the loss of vital benefits when you need them most.
Work with an Estate Planning Attorney to Preserve Medicaid Eligibility
Navigating the complexities of estate planning, including the establishment of a Medicaid Asset Protection Trust, requires legal guidance. It’s essential to work with an experienced estate planning attorney who can help you understand the intricacies of Medicaid eligibility, timing, and asset protection.At Charleston Estate Planning Law Firm, we craft estate plans according to the needs of our clients. If a MAPT is a good fit for you, your family, and your plan, we will work together to make sure the timing elements are taken into account. Contact us to learn more about how these work to protect your assets and your money.
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