Medicaid, a joint state and federal program, provides health coverage to low-income individuals of all ages. Qualifying for Medicaid requires meeting strict income and asset limits, which vary by state and the type of Medicaid coverage sought. If you are considering Medicaid Asset Protection Trusts, there are a few things to know.
These limits pose a significant hurdle for many, especially those needing long-term care. According to an ElderLawAnswers article, this is where Medicaid Asset Protection Trusts (MAPTs) come into play. MAPTs offer a legal avenue to protect assets, while preserving eligibility for Medicaid benefits.
A MAPT is an irrevocable trust established during your lifetime that transfers ownership of assets to a trust, so Medicaid excludes them from the resource limit during eligibility qualification. Once transferred, you no longer own the assets directly, which helps you to meet Medicaid’s eligibility criteria. Appoint a trustee other than yourself to manage the trust and to transfer the assets, such as real estate or stocks, into the trust’s name correctly.
Key Considerations:
- Timing is Crucial: A MAPT must be created and funded with Medicaid’s 60-month lookback period in mind. Assets transferred into the trust within this period may penalize your Medicaid eligibility.
- Living Arrangements: Transferring your home into a MAPT doesn’t mean you have to move out. You can still reside in your home, although the trust technically owns it.
- Income and Benefits: You can receive income from the trust’s assets. However, this income may affect your Medicaid eligibility.
Medicaid Asset Protection Trusts are a valuable strategy for individuals looking to qualify for Medicaid without sacrificing their assets. If you are considering Medicaid Asset Protection Trusts, work with an attorney to understand how these trusts work and the financial considerations involved, so you can make informed decisions about your long-term care planning. If you would like to learn more about elder law, please visit our previous posts.
Reference: ElderLawAnswers: What Are Medicaid Asset Protection Trusts?
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