John Crow 
If you or a loved one may need nursing home care in the future, qualifying for Medicaid can be essential to managing those high costs. However, one of the biggest hurdles to eligibility is the value of your assets. Even modest savings or home ownership can disqualify you from receiving Medicaid benefits. And even if you do qualify, you might still worry that the state could pursue reimbursement from your estate—particularly your home—after your death through Medicaid estate recovery.
Fortunately, there are legal tools available to help you protect your assets while still qualifying for Medicaid. One of the most effective strategies is a Medicaid Asset Protection Trust (MAPT). In this guide, we’ll explain how a MAPT works, what it protects, and whether this type of trust may be the right fit for your long-term care and estate planning goals.
What Is a Medicaid Asset Protection Trust?
A Medicaid Asset Protection Trust (MAPT) is a specific type of irrevocable living trust designed to shield assets from being counted by Medicaid when determining eligibility for long-term care benefits. When you create a MAPT, you must legally give up control over the assets you place in the trust. This means you cannot serve as the trustee or use the assets for your own benefit. Instead, a trustee you appoint—often a trusted family member or professional—manages the trust according to the terms you establish when the trust is created.
Typically, the trust agreement directs the trustee to preserve and eventually distribute the assets to your beneficiaries, such as your children, after your death. Because you no longer legally own or control the assets, Medicaid does not consider them when evaluating your eligibility. Just as importantly, those assets are protected from the Medicaid Estate Recovery Program (MERP), which seeks to recoup the cost of care from a recipient’s estate after death.
How Do Medicaid Asset Protection Trusts Work?
A Medicaid Asset Protection Trust allows you to transfer ownership of certain assets out of your name so that they are not counted when determining your eligibility for Medicaid. Here’s how the process generally works: You act as the grantor — the person creating the trust and transferring assets into it.
- You are the grantor — the person who creates the trust and transfers assets into it.
- You draft a trust agreement, a legal document that outlines how the trust will operate, including who will manage the trust and who will receive the assets after your death.
- You appoint a trustee, who will manage the trust according to your instructions. This must be someone other than you or your spouse—often an adult child, trusted relative, or professional fiduciary.
- You designate beneficiaries, typically your children or other loved ones, who will receive the remaining assets after your death.
- The trust must be irrevocable, meaning you give up the right to change the terms or take back the assets once they’re transferred. This is a crucial requirement—only assets in an irrevocable trust are shielded from Medicaid eligibility calculations and protected from the Medicaid Estate Recovery Program (MERP).
- By following these steps, a MAPT allows you to preserve assets—such as your home or savings—for your heirs, while still qualifying for Medicaid coverage when the time comes. Medicaid Asset Protection Trust Pros and Cons
While a MAPT is a useful estate planning tool, it’s crucial to understand its benefits and limitations so you can use it effectively.
MAPT Benefits
A MAPT can help you become eligible for Medicaid to cover long-term care and protect a wide variety of assets from estate recovery after your death. You can also still enjoy some benefits from the assets in your MAPT, even though they are no longer under your control. For example, you can still live in your home if you transfer it into a MAPT, and you can still collect dividends from stocks in your MAPT. Naming beneficiaries for your MAPT also helps your estate avoid probate, saving your loved ones time and money in the inheritance process.
MAPT Limitations
While a MAPT can be a powerful tool, it’s important to understand its limitations before moving forward.
First and foremost, a MAPT is irrevocable—once you transfer assets into the trust, you cannot take them back or change the terms. You are giving up control over those assets permanently, so it’s essential to be confident in your decision and your long-term financial plan.
Second, MAPTs are not a way to immediately qualify for Medicaid. Medicaid has a five-year look-back period, meaning any transfers into the trust within five years of applying for benefits can result in a penalty or delay in coverage. This makes early planning critical.
Additionally, while the principal in the trust is protected, any income generated by those assets—such as rental income or stock dividends—may still be counted toward your Medicaid income limit, which could affect your eligibility or share of cost.
Finally, it’s important to note that Medicaid doesn’t cover every possible cost of long-term care. A MAPT should be just one part of a broader financial and estate plan. Working with an experienced estate planning attorney can help ensure you are prepared for both covered and uncovered expenses as you age. What Assets Does a MAPT Cover?
What Assets Does a MAPT Cover?
You can transfer almost any kind of asset into a MAPT, including:
- Your home and other real estate
- Stocks, bonds, and mutual funds
- Certificates of deposit
- Bank accounts
- Vehicles
Typically, you can only transfer retirement accounts into a MAPT by cashing them out, which can have unwanted tax implications.
Protecting Assets From Medicaid in Your State
While Medicaid Asset Protection Trusts follow federal guidelines, each state administers Medicaid with its own rules and procedures. Understanding how MAPTs are treated in your state is essential for effective planning.
- In Tennessee, MAPTs are a widely accepted strategy for protecting assets from Medicaid eligibility assessments and estate recovery. Assets placed into a properly structured irrevocable trust are not counted for eligibility purposes after the five-year look-back period. However, Tennessee does enforce its Medicaid Estate Recovery Program (MERP) aggressively, meaning assets that pass through probate or remain in the applicant’s name can be subject to recovery. MAPTs provide a strong shield, especially when used to protect the home and liquid assets that would otherwise be vulnerable.
- In Kentucky, the rules are similar, but the state’s Medicaid office may take a closer look at trust arrangements to ensure compliance. As in most states, assets in an irrevocable MAPT are excluded from eligibility calculations if transferred at least five years before applying for Medicaid. Kentucky also participates in estate recovery, making MAPTs a valuable tool to preserve family wealth. However, documentation and trust structure must be precise to avoid issues during the application process or after death.
In both states, working with an experienced estate planning attorney is key to ensuring that your trust is compliant, properly funded, and structured to achieve your goals.
Do You Need an Attorney to Create a MAPT?
You should consult an attorney when creating a MAPT. Medicaid regulations do change and vary from state to state, and setting the trust up correctly is essential to ensuring your assets are safe. Errors in setting up the trust could lead to you becoming ineligible for Medicaid and relinquishing control of your assets for no reason or allow estate recovery to decrease into your loved ones’ inheritances. A skilled attorney in your state can set up all the paperwork, help you understand the rules, and put every detail in place so your long-term care and estate planning strategies go according to plan.
Protect Your Assets From Medicaid With Crow Estate Planning & Probate
A MAPT can help you secure your long-term care and protect your legacy. Before deciding whether a MAPT is right for you and how you can combine it with other estate planning strategies to achieve your goals, consider consulting an experienced attorney. If you’re in Tennessee or Kentucky, the dedicated estate planning and trust attorneys at Crow Estate Planning & Probate are ready to assist you.
Our experienced attorneys focus on MAPTs and other estate planning solutions to guard your assets. Starting with a free consultation, our acclaimed legal team will help you develop a complete strategy to protect your assets from Medicaid and set up your trust documents with precision for peace of mind.
Contact us today for a free consultation to protect the legacy you’ve built.
