Medicaid Asset Protection Trust (MAPT)

Introduction

• Speaker: Michael Ettinger from Ettinger Law Firm
• Focus of Lecture: Medicaid Asset Protection Trust (MAPT)
• Part of a series including topics like elder law, second marriage planning, and planning for adult-dependent children.

Preliminaries

• Q&A at the end via Zoom
• Presentation materials to be sent out after the session
• Condensed version of Ettinger's book provided as an e-booklet

Ettinger Law Firm

• Specializations: Elder law, estate planning, wills and probate, tax strategies, Medicaid applications
• Offices: Throughout New York, from Nassau to Albany

Medicaid Asset Protection Trust (MAPT)

Basics of Trusts

• Trust Definition: Legal entity separating use and enjoyment of property from ownership
• Assets are titled to the trust; grantor has use and enjoyment but not ownership
• MAPT: Holds assets to protect them from Medicaid claims

Five-Year Lookback Rule

• Medicaid can review asset transfers up to five years before applying for care
• Purpose: Prevent transferring assets to become Medicaid-eligible at the last minute

Home and Life Savings Protection

• Why Set Up MAPT?: Avoid Medicaid placing a lien on home; protect assets for heirs
• Applicable to non-qualified assets (non-IRAs) to avoid Medicaid consuming them

Structure and Flexibility of the Trust

• Irrevocable: Another trustee (usually adult children); grantor cannot directly access principal
• Trust property has its own tax ID
• Income Only: Beneficiaries get income generated but not principal
• Maintains tax exemptions on primary residence
• Allows property transactions without resetting the look-back period

Alternatives

• Joint Ownership with Children: Risks if children face debts, divorce, or die
• Direct Transfer to Children: Exposes assets to children’s financial risks
• Life Estates: Beneficiary retains rights but must consider nuances like taxes and Medicaid recovery

Medicaid Application and Legal Nuances

• Spousal Refusal: Legally allows transferring assets to a healthy spouse, maintaining Medicaid eligibility for the other
• Probate Avoidance: Using trusts to avoid lengthy and costly probate process

Insurance vs. MAPT

• Use MAPT for facilities care and consider long-term care insurance for home care (hybrid approach)

Best Practices

• Do's: Timely transfers, repair expenses, regular income withdrawal, consult attorney for gifts
• Dont's: Personal expenses, car purchases, direct withdrawals of capital gains

Questions & Answers

• General queries about transactions, revoking trusts, life insurance policies, using the trust to buy/sell homes, and more.

Conclusion

• Encourage consultation with elder law attorney for personalized advice
• Information on scheduling a free consultation provided
• Reminder: Follow-up material to be provided including the recording and e-booklet