What type of trust protects assets from nursing homes?

One of the more well-known and effective planning strategies that can help avert nursing home costs is a Medicaid Asset Protection Trust, or MAPT. This type of trust is used in order to help people qualify for Medicaid, which may be used to pay for long-term nursing home expenses, yet still leave assets to be passed on to a person's beneficiaries. Here's how a MAPT works and what the benefits are:

A Medicaid Asset Protection Trust (MAPT) is an irrevocable trust, where once you place an asset in the trust, you no longer have control of or access to those assets. This becomes very important in Medicaid planning since Medicaid only allows eligibility based on certain income and asset limits. Through the transfer of assets into the MAPT, the assets generally are not counted for eligibility purposes in determining Medicaid eligibility, provided that the trust is properly structured and the transfer is completed outside of the Medicaid "look-back" period.

Transfers into Medicaid are subject to a five-year look-back. If an applicant transfers assets into a MAPT within five years of applying for Medicaid, the assets may still be considered countable and delay eligibility while additional penalties are applied. Established well in advance of applying for nursing home care, this allows the maximum utilization of a MAPT with fewer complications.

First, a MAPT ensures qualification for Medicaid  and safeguards healthy assets from getting drained by the nursing home stay, which often proves extremely expensive. This helps safeguard the assets and ensures that the beneficiaries of the grantor, like the children or other family members, would inherit the grantor's wealth, and the assets remain in the lineage of the grantor for years to come, as the grantor would have wished. What is more, under a MAPT, the assets of the deceased are probably not included in probate, so distribution is much faster and private.

To summarize, a Medicaid Asset Protection Trust (MAPT) is a valuable strategy for individuals seeking to protect their estate from the high cost of nursing home care while still qualifying for Medicaid. Proper legal guidance is crucial to ensure the MAPT complies with all state and federal regulations, providing financial peace of mind for the future. At One Pacific Trust, our vision is to be the leading provider of trust services, offering expert support to help you navigate the complexities of trust formation and secure your financial well-being.