Back to the Basics: Understanding Medicaid Asset Protection Trusts in New York

The tremendous benefit of planning ahead for possible long-term care needs cannot be explained enough. The typical New York family is understandably most concerned about paying monthly bills, attending birthday parties, fixing up the house, and the thousand other activities that fill the day. Taking the time to think about serious illness, death, and inheritance often falls quite low on the priority list.

The motto, “I’ll cross that bridge when I get there” may work well for issues that cannot be dealt with ahead of time, but that is certainly not the case when it comes to long-term care and similar elder issues. Planning makes all the difference, not just for the senior, but also their family. That is why it is critical to fight the inertia and be prudent about planning.

That principle is clearly illustrated when it comes to the ability to use a Medicaid Asset Protection Trust (MAPT).

Many New York families eventually rely on Medicaid to pay for long-term care. Paying out of pocket is often impossible (at least for long) because of the high cost. One obvious downside to Medicaid is the requirement to “spend down” assets in order to qualify. Eligibility rules are strict. Savings accounts dry up, investments are lost, and long-term family homes are often gone as a result of the “spend down” requirement.

But, when acting early enough, many of those assets can be saved–while still qualifying for Medicaid–via a MAPT. An “income only” trust, it involves shifting assets into the trust with an adult child (or other trusted friend/relative) named as trustee. The assets are unavailable when transferred, however, when it comes to assets like a family home, that usually does not make much of a difference–the seniors still live in the home and retain the exclusive rights to use it. The trustee is able to sell assets if necessary, and the elder beneficiary can change the trustee is some problem develops.

The key benefit is that, if the assets are in the MAPT for longer than five years, then they are protected from the “spend down” requirement for Medicaid eligibility. Even if the five year mark is not met, there is “credit” awarded for those years that the assets were in the trust. In short, a significant amount of assets can be saved by prudently using a MAPT.

For help creating a MAPT for your family in New York, please contact the elder law attorneys at our firm today.

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