What Is A Medicaid Asset Protection Trust?

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Medicaid Asset Protection Trust (MAPT)

A Medicaid asset protection trust is an estate document used to keep away assets so that one can become eligible for Medicaid. It’s a great strategy adopted by elder law attorneys in Brooklyn to protect clients’ assets from being eaten up by their long term care costs.

Why you should consider creating a Medicaid Asset Protection Trust in Brooklyn

Growing old is a time to look towards another kind of life entirely; a life of retirement – a  time where you wouldn’t have to work anymore. Just not because you wouldn’t but because your body can no longer continue the tussles of life. And that is a time when you’ll now have to depend on someone to care for you.

Most seniors in Brooklyn go into long-term care. Whether their care is brought to them at home or in a nursing facility, the cost of long-term care is high enough to drain one’s assets. But what about Medicaid?

Medicaid is provided by Government to people who live well below the poverty line. In Brooklyn, the requirement for eligibility is that you earn nothing more than $884 monthly nor have liquid assets totaling more than $15,900.

So if you have more than that, you do not qualify for Medicaid in Brooklyn. However, with the Medicaid asset protection trust, you can keep those assets in the trust so that they would not be counted as part of your possession for Medicaid eligibility.

How Medicaid Asset Protection Trust works in Brooklyn

Typically, asset protection is a legal strategy that allows you to shield your assets from liabilities, such as tax, lawsuits, debts, etc. Estate planning and elder law attorneys Brooklyn often turn to irrevocable trusts to offer you asset protection. That is because all assets kept in an irrevocable trust leave your ownership and become the sole property of the trust. Therefore, you, your creditors, or the court cannot touch those assets to settle any claim against you since the assets are no longer yours (literally).

So no hospital or assisted living facility can reach into your Medicaid Asset Protection Trust to settle your bills. These bills will be settled by Medicaid as if you have no assets, because actually, those assets are no longer in your ownership.

Benefits of using Medicaid Asset Protection Trust in Brooklyn

  1. When you hold assets in a Medicaid asset protection trust, you will be able to pass the most of your estate to your loved ones while still qualifying for Medicaid benefits.
  2. Tax benefits. Having a Medicaid Asset Protection Trust is also better than an outright transfer when it comes to tax. Some people will consider transferring a home to a child while reserving a life estate for themselves. Should your child sell the property, you would lose money on the capital gains exclusion. On the other hand, property kept in a MAPT will usually have a higher value when you die because housing cost is ever on the increase.  So should your child sell after your death, the price will be based on the value at your death, not at the time the MAPT was created.
  3. You continue to enjoy your income and MAPT assets. Although the assets in a Medicaid Asset Protection Trust are no longer yours, you still receive some benefits. You would not be allowed to sell any investments but will still receive your income normally. The trust assets are no longer in your ownership but you are still relatively in your control because you are the one who writes out the trust’s terms and selects a trustee who will manage the assets.

When to create a Medicaid asset protection trust in order to be eligible for Medicaid

There is a look back period of 5 years when you apply for Medicaid. They will look at your financial history during the last 5 years. If you are discovered to have made transfers (gifts) during that time window, you will be disqualified from Medicaid benefits for some time.

Notably, retitling assets into a trust is regarded as gifting the trust. That is why you have to execute and fund your Medicaid asset protection trust at least 5 years before applying for Medicaid in Brooklyn.

Looking to protect your assets and keep them for your loved ones? The time to plan is now. Get help with your Medicaid asset protection trust Brooklyn by contacting our law office today.

DISCLAIMER: The information provided in this blog is for informational purposes only and should not be considered legal advice. The content of this blog may not reflect the most current legal developments. No attorney-client relationship is formed by reading this blog or contacting Morgan Legal Group.

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