Protecting Assets with Medicaid Asset Protection Trusts

One of the most powerful tools for an estate planning attorney is the Medicaid Asset Protection Trust or “MAPT”. 

This Irrevocable Trust is used to shelter assets from predators and creditors as well as serve to exclude certain assets including real estate or financial investments from having to be spent down prior to Medicaid coverage taking over when someone needs to go into a long term care facility.

The key principle of a MAPT is that the grantor gives up control of the real estate or financial asset starting what is known as a five year look back.  The government is willing to let you exclude certain assets from being spent for your long term care but won’t let you transfer these assets on a Tuesday and go into a care facility on Thursday.  Or they won’t let you transfer the assets in February and go into a care facility with the government picking up the tab in May. 

When a person applies for Medicaid benefits they must disclose what assets they have and whether they have given away any significant assets in the past 60 months.

For more information on qualification limits you can look at the American Council on Aging Ohio Medicaid Income & Asset Limits for Nursing Homes & In-Home Long Term Care site.

So what if you have over the income and/or over the asset limit to qualify?  There are several strategies our office employs but one of the most used is the MAPT. 

In Ohio, a grantor can maintain limited control over assets in a Medicaid Asset Protection Trust while still potentially qualifying for Medicaid. Here are the key points to consider:

1. The trust must be irrevocable, meaning the grantor cannot modify or revoke it once established.  They are giving up control of the asset and entrusting it to a person they appoint as the trustee.

2. The grantor cannot serve as the trustee of the MAPT. A trustee, typically a family member or trusted individual, must be appointed to manage the trust assets.

3. The grantor may retain the right to live in a home transferred to the MAPT.  In most situations they remain in the home.  In certain situations they might find that purchasing a second home and moving into it would be advantageous.

4. For investment assets in the trust, the grantor may continue to receive income generated from these investments if the MAPT is designed as an income-only trust.

5. The grantor cannot have direct access to the principal or assets held in the trust.

6. For tax purposes, the MAPT is typically treated as a grantor trust, meaning the grantor continues to report income, deductions, and credits from the trust on their personal tax return.

It's important to note that Medicaid rules can be complex and may vary. Consulting with an experienced elder law attorney in Ohio is crucial to ensure proper establishment and compliance with state-specific regulations.  Schroeder Law Group helps prepare strategic estate plans for clients from our Hillsboro, Ohio office, serving clients from nearby Mount Orab, Lynchburg, Georgetown, West Union, Washington Court House, Leesburg and Wilmington, Ohio.

Please schedule a strategy session for specific advice or go see another estate planning attorney.  The above information is provided for informational purposes and you should not make any decisions about a Medicaid Asset Protection Trust or any other estate plan without consulting an attorney.

Schroeder Law Group - Hillsboro, Ohio attorneys - Estate Planning - Probate - Real Estate