Medicaid Asset Protection Trusts
When a person starts Medicaid planning, it can sometimes be a shock to realize that the program has very strict income and asset limits – for example, in 2024, New York Medicaid required a single program participant to have no more than $1,732 per month in income, and $31,175 in assets. However, with proper planning, it may still be possible for you to get approved for Medicaid, and the right attorneys in Westchester County or Putnam County can help.
How To Preserve Assets & Receive Medicaid?
In order to determine whether a person is eligible for New York Medicaid, the agency will evaluate their assets and income, as well as any transactions where assets were sold or given away. Medicaid has what is known as a “look-back” period – 60 months, or 5 years, in New York – during which any asset transfer that is not sold for fair market value will result in a penalty (a loss of Medicaid coverage) for one or more months. The rationale is that if someone has the assets to give away, they could be using it to pay for their care.
It is perhaps only natural that people do not want to completely divest themselves of all assets when applying for Medicaid, even if they need the care. There is a way to retain some assets, however, and that is by creating what is known as a Medicaid asset protection trust (MAPT). A trust is a legal document that allows a person to retitle assets in the name of the trust, which effectively removes the assets from proceeds like probate or Medicaid evaluation if planned correctly.
Positives and Negatives
A trust must fulfill certain criteria in order to qualify as a MAPT in New York. Perhaps the most important one is that it must be irrevocable – that is, you may not generally serve as trustee, unlike with revocable trusts, and very little about the trust may be modified once it has been created. The trust’s irrevocability is crucial because it means that the grantor (the creator of the trustee) no longer controls the assets in it, and they cannot modify the trust to re-acquire that control.
There are positives and negatives to placing your assets in a MAPT. As one might imagine, a properly planned MAPT will protect those assets from Medicaid, so they cannot factor into an eligibility assessment. However, it does mean that unlike with revocable trusts, you will lose control of the assets placed in a MAPT. In addition, it can be more expensive and time-consuming to draw up a MAPT than it would a simple will or even a revocable or living trust.
Contact A Westchester County or Putnam County Medicaid Planning Attorney
Medicaid planning can be a complex endeavor, and it can take a knowledgeable Westchester County elder law attorney to help ensure that you are able to preserve the assets that matter the most, while still being eligible for long-term care. Meyer & Spencer, PC has experience in these matters, and will gladly put it to work for you. Call us or text us today at (914) 741-2288 to schedule a consultation.
