by Kristen A. Peck, Associate Attorney

Quick Tips for your New York MAPT

Medicaid Asset Protection Trusts are a powerful planning tool that preserve assets and can enable applicants to qualify for Medicaid. However, it’s important to understand the rules of the trust; for instance, which assets can go in and which assets stay out, and the critical timing involved in these transfers. Here are some do’s and don’ts to follow that will give you the maximum value for your Medicaid Asset Protection Trust.

  • Act early, transfers to a Medicaid Asset Protection Trust are subject to a five-year look back period for Medicaid nursing home eligibility (home care rules are different)
  • Choose your Trustee carefully
  • Always talk to an attorney before transferring assets into your Trust
  • Fund your Trust with assets you would like to protect and preserve for your family members
  • Update your homeowner’s insurance if any real property is transferred to your Trust
  • Pay any maintenance, upkeep, taxes, and any other expenses on real property in your Trust
  • Transfer any life insurance that has a cash value into your Trust
  • Report any income on assets in your Trust (including dividends, rental income, etc.) on your income tax return (if it is a “Grantor” Trust)
  • Attend a PCS quarterly Trust Administration Workshop (pierrolaw.com/events)

Things To Avoid in your MAPT:

  • Waiting until its too late, individuals who are concerned about long-term care expenses should start before the need for Medicaid arises
  • Transferring all your assets to the trust – keep enough to be comfortable
  • Transferring retirement accounts to your trust – they are protected already
  • Receiving distributions of principal from your Trust
  • Using Trust Assets to pay personal expenses

Things To Remember for your MAPT:

  • As the creator of your Trust, you reserve certain rights that allow you flexibility if your circumstances change – you can change Trustees and Beneficiaries any time
  • You can always transfer additional assets to your Medicaid Asset Protection Trust later, however, this will start a new five-year look back on that asset transfer
  • Your Trustee can distribute principal to children and other beneficiaries, who are then free to use the money for any purpose