A Medicaid Asset protection trust can be an instrumental tool for those intending Medicaid applicants who have excess assets. Remember that Medicaid is a government funded program meant for those who cannot afford the cost of private health care. So, if the value of your assets is more than a certain limit, you wouldn’t be eligible for this program. However, if you set up a Medicaid asset protection trust, you should be able to protect your assets from Medicaid and still be eligible for this government funded program.
Before setting up Medicaid asset protection trust in Bronx, there are a few questions you need to ask yourself. Some of the questions are:
- What is a Medicaid Asset protection Trust?
- How does a Medicaid asset protection trust work in Bronx?
What is a Medicaid Asset Protection Trust?
A Medicaid Asset Protection Trust or a MAPT is a trust created to protect assets from being considered for Medicaid eligibility. A Medicaid asset protection trust allows an individual to be eligible for long term care benefits from Medicaid, while securing assets from being used if long-term care is required.
How Does Medicaid Asset protection Trust work In Bronx?
Understanding how Medicaid asset protection trust works in Bronx is very important especially if you an elder in the city or if you have an elderly loved one.
A Medicaid asset protection trust or a MAPT is an irrevocable trust—a trust where its terms cannot be changed, altered, or terminated—without the consent of the beneficiaries. However, the idea behind a MAPT is that any assets placed in the trust are gifts to the beneficiary and are placed outside the grantors or trust owner’s estate. This is the main reason why the assets are protected.
The creator of a Medicaid trust must designate an individual aside from his or her spouse as trustee. Although this denotes that the grantor is relinquishing control, he or she still has the power to discard and replace any trustee and keep a limited power of appointment which allows the grantor to change the beneficiaries of the trust. If the grantor is a homeowner, he or she can keep the right to reside in the home rent-free for their whole life, with the spouse having similar right.
The “life estate” allows the grantor or trust owner to continue receiving any property tax exemptions, such as STAR. Any assets in the trust also get a complete step up upon the death of the grantor- thus avoiding capital gains tax.
The trust owner is not entitled to principal or corpus of any assets kept in an irrevocable trust. While the trust owner cannot use the principal of the trust, he or she can receive all income (interest, dividends, rental income, etc.) that the trust assets may generate. Since the trust owner must designate a separate individual to act as the trustee of the trust, it is the job of the trustee and not the trust owner to invest the assets kept in the trust.
In addition, because the trust owner has some control over assets placed in the MAPT, it is deemed a trust owner’s trust and the trust owner is taxes on any income, even though a different tax identification is used for the trust.
When an irrevocable trust is set up, assets that the trust owner wants to protect are then renamed in the name of the trust. This is what is regarded as “funding the trust.” Assets can be anything from a checking or brokerage account to the title of one’s residence. Individual Retirement Accounts don’t get renamed into the name of the trust as they are already secure for Medicaid purpose by law, so provided the much needed minimum distribution is taken.
Most times, grantors or trust owners put their home in the trust and a few liquid assets, and name a child as trustee and forget about it for years. Most trusts provides that after the demise of the first spouse, the income interest continues for the benefit of the surviving spouse.
Contact us for Your Medicaid Asset Protection Trust Attorney Bronx
Contact our office if you have questions regarding how a trust works, or if you need a Medicaid Asset Protection Trust attorney. Our Medicaid Asset Protection Trust are experienced and versed in matters regarding probate and can help in ensuring that the probate process is done without any hindrance.