Medicaid Asset Protection Trusts

Long term care insurance is one of the options from protecting assets from nursing home costs. However, if a person is unable to obtain long term care insurance, then the next best option is the creation of a Medicaid Asset Protection Trust (MAPT). A MAPT names someone other than the creator or his or her spouse as the trustee to avoid the appearance of controlling the trust or the assets held by it. The principle assets held by the MAPT must not be in the control of the creator, otherwise it becomes available to nursing homes and other creditors. The lifestyle of the creator is usually not affected because the creator can still use and enjoy the home, which is usually the largest asset held by the MAPT.

The MAPT is subject to a five year look back period and if assets are transferred to it and remain in it for five years, then a nursing home would not be able to touch those assets after that period of time.

Sometimes a client will ask about putting his or her home in an adult child’s name or in the name of all their children. While it may be less costly to make a deed transfer than create an MAPT, there are many disadvantages to it and a client should be made aware of the pros and cons before making such a drastic decision.