One common concern for individuals creating their long-term care plans is how to protect their assets. Since the biggest and most important asset is often their family home, families must decide whether to continue living there throughout their retirement years or pass it down to the next generation. Sometimes they feel forced to choose between accessing the healthcare they need or keeping the home they’ve loved for so long.
Fortunately, a Medicaid Asset Protection Trust (MAPT) can provide a solution. With the right plan, you can qualify for Medicaid benefits while keeping your family home and other assets secure. Learn more about how these trusts work, how they can help you keep your family home, and how to make a trust a part of your estate plan.
How Can a Medicaid Asset Protect Trust Protect My Home?
A family home is often a person’s most cherished and financially valuable asset. It carries memories, has sentimental value, and can provide financial stability for future generations. However, if you need Medicaid coverage to help pay for your long-term care, the value of your home could make you ineligible for coverage. Without a Medicaid Asset Protection Trust, Medicaid could place a lien on your home to recover the cost of your care after you pass away. That could mean your family is unable to inherit the property from you.
However, with a MAPT in place, your home is protected. Once transferred to a trust, Medicaid cannot claim it as a financial resource because it is no longer in your name. The trust legally owns it.
The MAPT is irrevocable, so the trust’s assets are safeguarded for your beneficiaries. After you pass away, your home and any other trust assets can be distributed to your heirs according to your wishes.
How Do I Start a MAPT?
A Medicaid Asset Protection Trust is a safe and legal way to shield your assets. Setting up a MAPT is best handled by an experienced estate planning attorney. They can ensure the trust is set up correctly to protect your family home now and left to your heirs after you pass on.
Here is how the process of setting up a MAPT generally works:
Assess Your Assets
Identify the assets you want to protect within the trust, including your home, savings accounts, investments, or other properties. Your attorney can help you determine which assets suit the trust based on your circumstances.
Choose a Trustee
Since the MAPT is irrevocable, you’ll need to appoint a trustee to manage its assets. You can choose anyone as a trustee. Many prefer a trusted family member or friend, but you can also select a professional trustee. Despite naming a trustee, you will retain the right to benefit from the assets throughout your lifetime. The trustee won’t legally control the assets until you pass away.
Formalize Your Trust
Once you’ve selected your assets and trustee, your estate planning attorney will help draft and finalize the MAPT documents according to Pennsylvania and federal Medicaid laws. When the paperwork is complete, the assets are transferred into the trust, securing your eligibility for Medicaid and protecting your family home.
A critical note about starting a MAPT: Medicaid has a “look back” period of five years. This means Medicaid can examine any assets transferred into a trust up to five years before you apply for the benefits. If assets were placed in a trust during this period, Medicaid can penalize you or delay your eligibility. Because of this rule, starting the process as soon as possible is best.
Create an Estate Plan That Protects Your Future
Estate planning requires you to balance your needs with your family’s future. A Medicaid Asset Protection Trust can provide peace of mind, allowing you to get the care you need without giving up your home or the assets you’ve worked hard to build. Our experienced estate planning attorneys are ready to help you navigate Medicaid’s requirements, establish your MAPT, and create an estate plan that protects what matters most to you.
Take steps to preserve your assets and leave a meaningful legacy to your loved ones. Contact Auld Brothers Law Group today to learn how we can support your estate planning needs.