Medicaid Asset Protection Trust (MAPT): Complete Guide
How Medicaid Asset Protection Trusts work, the 5-year lookback period, pros and cons, and whether a MAPT is right for your long-term care planning strategy.
Key Takeaways
- 1A MAPT is an irrevocable trust that protects assets from Medicaid spend-down
- 2Assets must be in the trust for 5 years before applying for Medicaid
- 3You give up control of assets but can receive income from the trust
- 4Your home can be placed in a MAPT while you continue living in it
- 5MAPTs are not right for everyone—consider your timeline and needs
- 6Work with an elder law attorney to properly establish a MAPT
What Is a Medicaid Asset Protection Trust?
A MAPT is an irrevocable trust specifically designed to protect assets from being counted for Medicaid eligibility.
- **Irrevocable**: Once established, you cannot change or revoke the trust
- **Separate legal entity**: Assets in the trust are no longer "yours" for Medicaid purposes
- **Trustee manages assets**: You appoint someone (not yourself) to manage trust assets
- **Beneficiaries inherit**: Your children or other heirs are named as beneficiaries
- **You can receive income**: The trust can pay you income from invested assets
- **Home protection**: Your home can go in the trust while you continue living there
Irrevocable vs Revocable
A revocable trust does NOT protect assets from Medicaid—you still control those assets. Only an irrevocable trust like a MAPT provides Medicaid protection because you've given up control.
How MAPTs Work
Understanding the mechanics of a MAPT helps you decide if it's right for you.
- **Step 1**: Work with an elder law attorney to draft the trust document
- **Step 2**: Transfer assets (home, investments, etc.) into the trust
- **Step 3**: Appoint a trustee (usually an adult child) to manage trust assets
- **Step 4**: Wait 5 years for assets to be fully protected from Medicaid
- **Step 5**: When you need care, trust assets are not counted for eligibility
- **At death**: Trust assets pass to beneficiaries, avoiding probate
You Give Up Control
Once assets are in a MAPT, you cannot take them back. If you need to sell your home, the trustee handles it and you may not receive proceeds. Make sure you're comfortable with this before proceeding.
The 5-Year Lookback Rule
The lookback period is the most important timing consideration for MAPTs.
- **60-month lookback**: Medicaid reviews all transfers in the 5 years before application
- **Penalty for transfers**: Assets transferred within 5 years create a penalty period
- **Penalty calculation**: Transfer amount ÷ average nursing home cost = months of ineligibility
- **Start date**: The 5 years begins when assets are transferred to the trust
- **Plan early**: Ideally establish a MAPT while healthy in your 60s or early 70s
- **Partial protection**: Assets transferred more than 5 years ago are fully protected
The Earlier, The Better
Many people wait too long to establish a MAPT. If you're in your 60s and in good health, now is the time to consider whether a MAPT makes sense for your situation.
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MAPT Pros and Cons
Weigh the benefits and drawbacks carefully.
- **PRO**: Protects assets from Medicaid spend-down after 5 years
- **PRO**: You can continue living in your home
- **PRO**: Assets pass to heirs, avoiding probate
- **PRO**: May receive income from trust investments
- **PRO**: Protects assets from creditors and lawsuits
- **CON**: Irrevocable—you lose control of assets
- **CON**: 5-year wait before full protection
- **CON**: Setup costs ($2,000-$5,000+ for attorney)
- **CON**: No stepped-up basis on assets (may increase capital gains for heirs)
- **CON**: Cannot be trustee or have too much control
Who Should Consider a MAPT?
A MAPT isn't right for everyone. Consider your specific circumstances.
- **Good candidate**: Healthy individuals in their 60s-70s planning ahead
- **Good candidate**: Those with assets above Medicaid limits who want to protect them
- **Good candidate**: People with family members willing to serve as trustee
- **Not ideal**: Those who may need nursing home care within 5 years
- **Not ideal**: People who need access to their assets for living expenses
- **Not ideal**: Those with modest assets that could be spent down naturally
- **Alternative**: Consider long-term care insurance if you can qualify
Get Professional Guidance
A MAPT is a major decision with lasting consequences. Work with an experienced elder law attorney who can assess your complete situation and recommend the best approach.
Comprehensive Asset Protection
While a MAPT protects assets from Medicaid, your retirement accounts need protection too. A Gold IRA allows you to diversify retirement savings into physical precious metals, providing a hedge against market volatility and inflation.
Protect Your Retirement From Every Angle
A MAPT protects from Medicaid spend-down. But market crashes and inflation can also devastate retirement savings. Consider diversifying with gold.
- Gold IRAs provide stability during economic uncertainty
- Physical gold has preserved wealth for thousands of years
- Augusta Precious Metals offers asset protection consultations
Frequently Asked Questions
1What is a Medicaid Asset Protection Trust?
A MAPT is an irrevocable trust that holds your assets so they're not counted for Medicaid eligibility. Once assets have been in the trust for 5 years, they're protected from nursing home spend-down requirements.
2How long must assets be in a MAPT before Medicaid?
Assets must be in the trust for at least 5 years (60 months) before you apply for Medicaid. Assets transferred within this "lookback period" will trigger a penalty period of Medicaid ineligibility.
3Can I be the trustee of my own MAPT?
No. If you serve as trustee, Medicaid will consider the assets still under your control and count them for eligibility. You must appoint an independent trustee, typically an adult child or professional trustee.
4Can I put my home in a Medicaid Asset Protection Trust?
Yes. You can transfer your home to a MAPT while retaining the right to live there for life. This protects the home from Medicaid estate recovery while allowing you to continue residing in it.
5What is the difference between a MAPT and a revocable trust?
A revocable trust can be changed or cancelled and does NOT protect assets from Medicaid—you still control those assets. A MAPT is irrevocable, meaning you give up control, which is why the assets are protected after 5 years.
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