Medicaid is a blessing to senior citizens looking towards long-term care in NYC. Getting personal and medical care is expensive, whether they get the care at home or in an assisted living facility. So Medicaid helps to cover these costs.

However, this assistance is only for people below a certain financial capacity. People earning above $884 monthly and having assets worth over $15,900 in New York are not eligible for Medicaid.

So if you have such assets to your name, how do you protect them from not getting depleted by the heavy costs of long term care?

The answer is Medicaid asset protection trust.

What is Medicaid asset protection trust and how does it work in NYC?

A Medicaid asset protection trust works by locking your assets away so that your countable estate becomes less than the Medicaid limit. A Medicaid asset protection trust thus helps you qualify for Medicaid in NYC even when you have substantial assets.

Typically, asset protection is a legal strategy that allows you to shield your assets from liabilities, such as tax, lawsuits, debts, etc. Estate planning and elder law attorneys NYC often turn to irrevocable trusts to offer you asset protection. That is because all assets kept in an irrevocable trust leave your ownership and become the sole property of the trust. Therefore, you, your creditors, nor the court can touch those assets to settle any claim against you since the assets are no longer yours (literally).

When validating your eligibility in NYC, Medicaid will typically not count those assets in a Medicaid asset protection trust. Hence, they would grant you public benefits if what’s left of your estate falls below the asset limit for Medicaid.

When to create a Medicaid asset protection trust in order to be eligible for Medicaid

There is a look back period of 5 years when you apply for Medicaid. That is, your financial history during the last 5 years will be looked at. If you are discovered to have made transfers (gifts) during that time window, you will be disqualified from Medicaid benefits for some time.

Notably, retitling assets into an irrevocable trust (like the Medicaid asset protection trust) is regarded as gifting the trust. That is why you have to execute and fund your Medicaid asset protection trust at least 5 years before applying.

Advantages of Medicaid Asset Protection Trust in NYC

1. When you transfer assets outright to a beneficiary, you won’t really be protecting those assets as you would obviously think. Let’s say you bequeath your house to your child. Should that child marry and get divorced, they may lose half the value of that property. Their creditors can come knocking, and the property would be gone in the twinkle of an eye.

But when you keep and transfer same assets in a MAPT, you are sure no creditors, bitter spouses, lawsuit, or Medicaid can lay claim to them.

2. You continue to enjoy your income and MAPT assets. Although the assets in a Medicaid Asset Protection Trust are no longer yours, you still receive some benefits. You would not be allowed to sell any investments but will still receive your income normally.

The trust assets are no longer in your ownership but you are still relatively in control because you are the one who writes out the trust’s terms and selects a trustee who will manage the assets.

3. Tax benefits. Having a Medicaid Asset Protection Trust is also better than an outright transfer when it comes to tax.

Some people will consider transferring a home to a child while reserving a life estate for themselves. Should your child sell the property, you would lose money on the capital gains exclusion.

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.

Get help from an asset protection attorney NYC

If you want to keep your assets so that they can pass on to your loved ones when you pass away, Medicaid Asset Protection Trust is the way to go. And our asset protection attorneys NYC are here to help you. We can help you plan towards your long term care so that your hard-earned assets do not get eaten up, leaving next to nothing for your survivors.

Call us today for expert assistance.