As people age, they’re likely concerned about where they’re going to live and who will take care of them when they’re unable to do so. They also may worry about how to pay for long-term care if they become incapacitated. While it’s true that Medicaid benefits cover your care in a nursing home or in an assisted living facility should you need long-term care, you must meet certain financial conditions to obtain them. And meeting those requirements can drain your savings, assets, and the money you’ve acquired during your lifetime.
A Medicaid Asset Protection Trust (MAPT), also called an Irrevocable Income Only Trust or Medicaid Trust, can help protect your assets if you’re applying for Medicaid benefits. A MAPT is an advantageous estate planning tool to shield your assets to ensure Medicaid eligibility. Protecting your assets is important to help ensure that Medicaid benefits, not your personal savings, will take care of the financial obligations of a long-term care facility. It’s critical to hire a skilled, experienced New York estate planning attorney so you establish a MAPT correctly and fund it with valid assets.
How a MAPT Works
If you’re 65 or older, you’re eligible for Medicare—a federal health insurance program that provides health coverage for many of your medical expenses. However, long-term care in an assisted living facility or a nursing home is not covered. If you need this type of residence because you or your spouse can’t live independently, you have to cover the costs or apply for Medicaid benefits to do it for you.
Depending on the care facilities, there are different types of Medicaid benefits, and the financial requirements vary according to status:
- Married with both spouses applying
- Married with just one spouse applying
For example, in 2023, the asset limit for a single person applying for Medicaid to live in a nursing home is just over $30,000. For a married couple with both spouses applying, the asset limit is just under $41,000. In general, this means your asset level must not exceed these numbers to receive Medicaid benefits.
Many people find it difficult to meet these financial rules and requirements, so they establish a MAPT to protect their primary assets so they can still be eligible for benefits.
Why You Need a Trustee for Your MAPT
When you create a MAPT, you give up control over certain assets to a third party known as a trustee. Usually, the trustee is a family member—often an adult child—and cannot be you or your spouse. But the role could also be designated to a close friend or a professional, such as an investment advisor, banker, or a bank or trust company.
Role of a New York MAPT Trustee
The trustee’s primary responsibility is to manage all the assets that fund the trust for beneficiaries who will inherit them. It sounds simple; however, the role isn’t always explicit and clear-cut. Here are the responsibilities of a MAPT trustee.
- They can’t be the trust grantor. This ensures that the trust is Medicaid-exempt.
- They must adhere to specific trust rules that define how trust money must be managed.
- The trustee holds the legal title to the assets that you, the grantor, place in the trust, and makes decisions about how the assets are used.
- They have the power to buy and sell assets, alter your investments, and manage the assets as you would.
- According to your wishes and the terms of the trust, they distribute assets to the beneficiaries.
Choosing a Trustee
Here are some other essential considerations for your trustee selection:
- They must be dedicated to always upholding the intent of the grantor and the needs of the beneficiaries.
- They should have the time, energy, and focus to devote to managing the trust responsibly for an extended period of time.
- They need to be of sound mind and body.
- Even if they don’t have financial or legal skills, you should be able to trust that they have sound judgment.