Not everyone will live to a ripe old age but it is a hope most of us have. And those of us who wish to live to that age would have to put certain plans in place to ensure they get as much comfort as possible. Most seniors in Buffalo, NY look to long term care, whether at home or in a nursing facility. Whatever the case, long term care costs are very expensive and can cut deep into one’s hard-earned money. The government provides Medicaid to cover these costs, but unfortunately, it is only for those people who obviously cannot afford it: including eligible low-income adults, children, pregnant women, elderly adults and people with disabilities. Typically, you must earn below $884/month and own less than $15,900 as personal asset to qualify for Medicaid in New York.
The Medicaid asset protection trust and how it works in Buffalo
There are different ways by which New York estate planning attorneys can help unqualified residents to qualify for Medicaid benefits. One of these methods is the Medicaid asset protection trust.
The Medicaid asset protection trust (MAPT) is an irrevocable trust where you can transfer your assets into. Once done, the assets leave your ownership and become the property of the trust. Since they are no longer in your name, they cannot be counted against you for Medicaid purposes. Your asset will now go below the asset limit, thereby qualifying you for Medicaid benefits.
These assets transferred into the MAPT can never be seized to cover your costs or liens. They are preserved. And while Medicaid covers your healthcare cost, your assets will be waiting to pass in their full amount to your beneficiaries when you pass away.
Medicaid Look-back period
It is important to note that when you create your Medicaid asset protection trust matters a lot. You must do so at least 5 years before you apply for Medicaid. That is because Medicaid looks at your financial history for the past 5 years. If they discover you have made transfers into a trust during that time, you will be issued a penalty period. This Medicaid penalty period is a duration in which you would be ineligible for Medicaid benefits. That means you would have to cover your long-term care cost yourself.
It’s always a great idea to contact an elder law attorney Buffalo, NY to plan early in order to avoid this penalty.
Benefits of Medicaid asset protection trust
By creating a Medicaid asset protection trust, you are protecting your loved ones. You are keeping your entire assets in trust for them, thus ensuring they receive the full value when you pass away.
Tax benefits — Having a Medicaid Asset Protection Trust is also better than an outright transfer when it comes to tax. When you do outright transfers such as gifting, a gift tax may be imposed. But all assets placed in an irrevocable trust such as a MAPT will pass on to the beneficiaries tax-free.
On the other hand, property kept in a MAPT will usually have a higher value when you die because housing cost is ever on the increase. So should your child sell after your death, the price will be based on the value at your death, not at the time the MAPT was created.
Furthermore, a MAPT potentially protects you from losing value of a property through your child’s embittered spouse. Say, for example, you bequeath a house outright to a child. If they get divorced, they may lose half the value of the property to the spouse. But if the house is in the ownership of the trust, no lawsuit can reach it, not even your child’s creditors.
Get help from an elder law attorney In Buffalo
There are many things to consider when looking at the future. To ensure you have all loose ends tied, speak with an elder law attorney today. They can help you look forward with peace of mind and assurance.
Contact us today to speak with an elder law attorney near you Buffalo
