Creating a Medicaid Asset Protection Trust

You’ve worked diligently over decades to save, plan for the future and protect yourself against various financial contingencies. Unfortunately, if you lack long-term care insurance, and you fail to establish an effective estate planning strategy, that careful planning could all unravel. Nursing home and assisted living expenses could eat into those assets substantially, preventing you from being able to leave property and money to your spouse or children and reducing your quality of life. What can be done?

A Medicaid Asset Protection Trust (MAPT) offers a powerful solution, effectively shielding your assets from the government’s view. In other words, when you apply to Medicaid to pay for nursing home expenses, the government will consider your principal in the MAPT to be unavailable. Therefore, you will qualify for assistance to pay for the nursing home care and your assets will be safe for your family’s use.

How It Works

The Medical Asset Protection Trust is an irrevocable trust that permits you, the trustor, to name one or more trustees – excluding yourself or your spouse – to manage it. The trust allows you to provide detailed instructions about how to handle the assets, and it gives you the right to change trustees at any time if you aren’t happy with their management.

While the trust prohibits your access to the principal, you are entitled to receive the income it generates, such as interest on CDs and dividends from stock, for your lifetime. You can make the income available to your spouse as well. The trust also permits you to use any real estate it contains. In addition, you can instruct the trustee to make gifts to other family members.

Factors to Consider

Although a Medical Asset Protection Trust provides an effective means of preserving property and money for your loved ones, it’s not the right choice for everyone. Since it keeps the principal out of your and your spouse’s reach, carefully evaluate your finances before establishing a MAPT. Other estate planning tools or strategies may be more appropriate based on your assets and debts, the nature of your business, your health and future health prognosis and your other income streams. Consult with an experienced estate planning attorney to assess your options. The Gudorf Law Group can help; please call us at 1-937-898-5583.

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