Medicaid Asset Protection Trusts (MAPT) are the best way to preserve assets should you be unable to purchase long term care insurance. Sometimes family members presume putting their assets in joint names with their children will help them should they be forced to go into a nursing home and apply for Medicaid. This is a mistake! Putting assets in the name of children or outright transfers to children can create more problems than they solve. The children may end up getting divorced. Creditors may attack these assets to satisfy debts. They may also have other liabilities or problems which impact on these assets and can cause them to be lost. Children also can spend the money!
Should you need assistance because a family member needs to go into a nursing home, the best way to deal with this situation would be to contact an elder law attorney in your community and have him or her lay out a plan to protect your families assets. The best way to do long term planning is not to wait until the last minute but to meet with an elder care lawyer and put a long term estate plan in motion.
How do Medicaid Asset Protection Trusts Work?
MAPT must be an irrevocable trust. The principle must not be available to the income beneficiary for it to be protected. Family homes are ideal assets to be placed in these trusts. The trust can virtually handle any transactions the individual who placed his or her assets in the trust for had previously dealt with. However, the individual who creates the trust cannot be trustee. In most cases a parent names one of his or her children as trustee. The parent maintains control of the trust by having the authority to change the trustee in the event they are dissatisfied with the trustee’s actions.
MAPT Look Back Period
The MAPT is subject to a five year look back period. All assets transferred during this five year period will still be considered a resource for nursing home payments. However, it should be noted if you prepared a MAPT and you transferred resources four years prior to entering a nursing home, you would only be self-paying at the nursing home for a period of one year. You will have accumulated four years of the five year look back period.
IRA’s And MAPT’s
Individual Retirement Accounts, 401(k)’s, 403 (b)’s and pension plans assets are never placed in the MAPT. This is because the principle of all of these retirement plans are exempt from Medicaid’s five year look back period. It addition these types of assets are considered testamentary substitutes. They do not go through probate, they go directly to the individual named as the beneficiary of these assets.
About The Author
Elliot S. Schlissel, Esq. is a member of the National Academy of Elder Law Attorneys. For more than 45 years Elliot and his staff of attorneys have represented seniors with regard to drafting wills, trusts and estate plans. In addition, Elliot assists his clients with regard to nursing home issues and Medicaid planning.
