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Medicaid asset protection trust

The Medicaid program is a lifeline for individuals needing affordable, quality medical care. However, this insurance benefit is only available to specific individuals who meet the stringent eligibility guidelines of the program. If your assets exceed Arizona’s low threshold, the state can block you from receiving necessary benefits.

If you are interested in applying for Medicaid benefits, you may be able to protect your assets with a Medicaid asset protection trust. This trust can help safeguard your assets, allowing you to file for Arizona Medicaid benefits.

At Pennington Law, PLLC, our experienced estate planning lawyers can help you decide if Arizona Medicaid asset protection trusts should be a part of your estate planning portfolio. Our legal team understands that estate planning can be challenging, and we want to help you prepare for the future with confidence.

Contact our West Valley Arizona law firm for a confidential consultation and find out if a Medicaid asset protection trust can work in your favor. We look forward to answering your questions and providing the estate planning guidance you need.

How Does a Medicaid Asset Protection Trust Differ from Other Protection Trusts?

The Medicaid asset protection trust’s primary difference from other trusts is its purpose. A MAPT is an irrevocable trust designed to protect assets from being counted toward Medicaid eligibility. It differs from other asset protection trusts in that its primary purpose is to allow the grantor to qualify for Medicaid without having to spend down their assets to meet the program’s asset threshold.

Other types of protection trusts have their own unique purposes. For example, specific trust plans may protect assets from creditors or prevent assets from passing through probate upon the grantor’s death.

 

What Is a Medicaid Asset Protection Trust?

A Medicaid asset protection trust, or MAPT, is a legal tool used to protect your assets, allowing you to qualify for Medicaid benefits without counting the assets as part of your Medicaid-eligible income.

Medicaid is a government benefit program that provides health insurance coverage to low-income families and those with limited assets. The Medicaid program enforces strict rules on how much money and assets an applicant can have and still qualify for benefits. The Arizona Health Care Cost Containment System (AHCCCS) manages the state Medicaid program in Arizona. The AHCCCS website outlines the state’s low gross monthly income limits.

The purpose of a MAPT is to protect an individual’s assets from being counted toward their Medicaid eligibility requirements. Placing assets in a MAPT means that the assets are no longer considered the individual’s property. Therefore, they do not count towards the asset limit for Medicaid eligibility.

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How Does a Medicaid Asset Protection Trust Work?

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A Medicaid asset protection trust helps people qualify for Medicaid while protecting their assets from being seized by the government to pay for care expenses. A MAPT is a type of irrevocable trust, which means the person who creates it relinquishes power over it and the assets it holds.

Once the grantor (the person who creates the trust) places assets in the trust, they no longer control or manage the assets. Additionally, they cannot take back the assets in the trust. Only the trustee or assigned manager of the trust can access the assets.

It is also important to understand that Medicaid has a “look-back” period of five years. Assets transferred into a trust within five years of applying for Medicaid could potentially be subject to penalties. It’s vital to consider your estate plan well in advance. An experienced attorney can help you determine whether establishing a Medicaid asset protection trust may benefit you and help you avoid look-back penalties.

Once the look-back period has passed, the grantor can apply for Medicaid benefits. Assets in the trust cannot count toward Medicaid eligibility requirements.

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Pros and Cons of a Medicaid Asset Protection Trust

Medicaid Asset Protection Trust

What’s the biggest positive to placing assets into a Medicaid asset protection trust? You are placing yourself in a position to qualify for Medicaid benefits when the time comes, without having to divest your estate of the assets you wish to pass on to those you leave behind. In other words, this form of trust can help preserve generational wealth and safeguard vital assets for your family members or beneficiaries.

Another benefit of a MAPT is that it protects your estate from Medicaid asset recovery. Without a MAPT in place, Arizona can go after your assets after you pass away in an attempt to recoup some of the costs of providing for your care. However, if you have the trust in place, the state cannot seize the assets remaining in the MAPT to reimburse your long-term care costs. Additionally, with a MAPT, your family can avoid the time-consuming and complicated probate process.

Qualifying for Medicaid can save you and your family money and avoid exorbitant fees and costs associated with nursing homes or long-term care facilities.

Unfortunately, there are some drawbacks to establishing a Medicaid Asset Protection Trust. Gaining the benefits of a MAPT takes long-term planning due to the five-year look-back regulation. Asset protection trusts in Arizona are subject to review, allowing the state to examine your financial history from the previous 60 months. Immediately adding assets to a trust or giving away or selling property below fair market value may subject you to financial penalties or disqualify you from Medicaid services. Ideally, a MAPT should be established well before you need Medicaid benefits.

Finally, a Medicaid asset protection trust is irrevocable. You cannot control or manage the assets placed into the trust. Once established, you cannot make changes to the trust. The trustee of the MAPT — the person who manages the trust on your behalf — should therefore be someone you know and confide in to keep your best interests in mind.

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What Assets Can Be Placed into a Medicaid Asset Protection Trust?

A vital part of any estate planning strategy is deciding which assets to place into your trust. In the case of a Medicaid asset protection trust, you may add the following assets:

  • Checking accounts
  • Savings accounts
  • Mutual funds
  • Certificates of deposit
  • Real estate holdings
  • Your primary residence

However, be aware that you lose control of any asset you place into a Medicaid asset protection trust. Once placed in the irrevocable trust, only your assigned trustee can manage the assets. Because you lose the ability to manage and control what you place in the trust, you should be sure the trustee you select to manage the trust on your behalf is someone you can count on absolutely.

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Who Should Consider a Medicaid Asset Protection Trust?

It can be hard to imagine where you’ll be in five years, let alone 10 or 20. However, the time to start considering whether a Medicaid asset protection trust is right for you is today. If you are interested in learning more about MAPTs but are unsure if this form of trust can benefit you and your family in the long run, consider the following:

  • Are You Worried About the Costs Associated with Long-Term Care? Medicaid can help you pay for long-term care services, including nursing home care. If you have a medical condition or family history of certain medical conditions that require long-term care, consider placing assets in a MAPT. A MAPT might also be the right decision if your family lives out of state or cannot help care for you as you age.
  • Does Your Financial Standing Make You Ineligible to Apply for MEDICAID? If you believe your financial standing may jeopardize your ability to qualify for benefits, consider establishing an MAPT. Doping so may help you protect your assets and allow you to access Medicaid benefits when needed.
  • Do You Have Assets You Want to Protect for Your Family or Beneficiaries? Transferring your assets to a MAPT can help protect what’s valuable to you and preserve these assets for your family members or named beneficiaries. When managed by a loyal trustee, the assets held in your MAPT may also help you pay for additional long-term care expenses.

Discussing your unique situation with a skilled estate planning attorney is the best way to determine whether a Medicaid asset protection trust can benefit you and your loved ones.

Contact a West Valley Arizona Medicaid Asset Protection Trusts Lawyer Today

Considering your needs as you age can be unpleasant. Most people don’t want to confront the possibility of needing help as they get older. Unfortunately, paying for medical and long-term care can be prohibitively expensive. What happens when you need long-term care in the future?

Avoid worrying about your assets and the financial security of your family. Discuss your situation with a seasoned West Valley estate planning lawyer and determine whether establishing a Medicaid asset protection trust could benefit you. Our compassionate team will thoroughly review your situation and can help you find money management solutions that address your needs and goals.

Contact Pennington Law, PLLC today to arrange a confidential legal consultation. We look forward to meeting you and finding out how we can help you plan for your future.

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