Protecting Your Assets with Medicaid Asset Protection Trust

When a Medicaid candidate has an overabundance of assets, the Medicaid Asset Protection Trusts (MAPT) can be an invaluable plan of action to satisfy Medicaid’s asset restriction. This sort of trust allows an individual who would have otherwise been disqualified for Medicaid to become eligible again and be provided with the care they need in a nursing home or at-home. As the name indicates, the asset protection trust is intended to safeguard your property. But if utilized correctly, this legal tool can perform other functions too. Usually, someone applying for Medicaid is what comes to mind when we think of creating an asset protection trust. While the assets can be transmitted to friends or relatives, there are generally drawbacks and risks in doing so. In addition to the apparent problem of the virtuousness of the individuals involved in the situation, there are still hazards which cannot be foreseen.

For instance, will any of those individuals sustain an outstanding payment or financial obligation that will reveal the transmitted assets to collections by a creditor? Will any of the individuals separate from their spouses or die before you? Additionally, low-basis properties (such as a house that was bought several years ago for a value that is significantly less than its current market price) have a constant low basis in possession of the people to which they were transmitted.

When a trust is correctly developed to offer asset preservation, the assets transmitted to it are no longer considered to be in your ownership. Due to this, the assets are safeguarded from the range of Medicaid or other prospective creditors.

Accordingly, the trust is often referred to as a “Medicaid Trust.” However, be mindful of the fact that much like transfer to individuals, transfers to a trust are liable to Medicaid’s five-year “look back” period.

For a senior citizen to be qualified for nursing home care, in-home care, or assisted living from Medicaid, their income and assets must be limited. To inhibit applicants from straightforwardly giving away their possessions and money to qualify for Medicaid, the federal government resorted to implementing the “look-back period” as their solution.

The look-back is a fixed period before the senior’s application, during which the Medicaid administration agency analyzes all of the financial transactions that the individual has conducted. If a deal violates the look-back period’s regulations, the candidate will be assessed a sanction in the form of a period that the candidate is rendered ineligible for Medicaid. What this means is that they will not be able to obtain care services paid for by Medicaid for a specific period, like several months.

A Medicaid candidate is punished if assets (homes, artwork, cars, money, etc.) were transferred, sold, gifted, or given away for a significantly less amount than their fair market worth. These assets could have been sold for their appropriate fair market value to help cover the costs of long-term care had they not been transferred or gifted so inexpensively, which is the reason for this penalty period.

When Applying for Medicaid

You are required to disclose when you made assets transfers and the amount of those assets. Medicaid has the authority to question any transfers within the look-back timeframe. If you did not receive something of at least equal value in return for the asset you were transferring, you would be ineligible for Medicaid. The look-back period is five years for transfers made after the date the DRA went into effect, February 8, 2006.

Ineligibility Period

Asset transfers trigger an ineligibility period during the look-back period. The duration of the ineligibility period is computed by dividing the transferred amount by the monthly average expense of the nursing home care in your area. For instance, if $75,000 is transferred and the average fee of nursing home care in the area is $3,000 per month, the ineligibility period will be 25 months. The ineligibility period begins on the date that you apply for Medicaid.

The ideal situation would be for the senior to transfer assets and stay out of a nursing home until the time that the look-back period lapses. However, circumstances are not always so simple. Such rules can be complicated at best and can impact the sort of care that you or your loved ones receive.

Schedule a Consultation Today to Discuss Your Medicaid-Related Concerns

Our team of attorneys has over 35 years of experience helping seniors with Medicaid-related matters. We welcome you to call the Voeller Law Firm today at (210) 651-3851 to request a consultation and learn more about Medicaid, if you qualify, and how we can help you protect your assets with a Medicaid Asset Protection Trust. We are proud to serve the greater San Antonio, Bexar County, Comal County, Guadalupe County, and South Texas areas.

Our services go far beyond merely preparing – we do our best to help you protect your future.

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    Voeller Law Firm

    A law practice limited to estate planning, elder law planning, probate and business planning. Through seminars and free initial consultations, the lawyers at the Voeller Law Firm can help area residents and businesses evaluate their legal needs and determine what their options are.