Most people have heard scary stories about a family losing all their wealth to a nursing home, and I have seen a few examples myself. Planning ahead can protect you, and the Medicaid Asset Protection Trust ("MAPT") is a powerful tool to protect your wealth. But how does it work?
First, we have to understand that nursing home care and other long-term care is only paid for by Medicaid, special long-term care insurance, or "private-pay" (which means your own money). Standard health insurance policies and Medicare do not pay for nursing home care. Medicaid will pay for it, but Medicaid has income and resource limits, which means, if you have too much money, they will require you to spend your money first ("private pay") before Medicaid will start paying the bill. A nursing home in Western New York can cost approximately $14,000 per month. Your life savings can be drained quickly at that rate.
Many people's first thought is to transfer their assets, so they are below those resource limits and qualify for Medicaid. Not so fast! Medicaid has a five-year look back period. That means with your application for Medicaid coverage, they require five years of bank statements, tax returns, and other financial documents. Medicaid will penalize any transfers of assets for less than fair market value within that five-year period. Although we have techniques for protecting assets when you don't have five years to spare, the MAPT is the best protection possible.
Transfers of assets to a trust, such as the MAPT, are subject to the five year look back. If you plan ahead, however, you can transfer money and property to a MAPT, and after five years, those assets are no longer considered in a Medicaid application. Advanced planning is necessary to maximize the protection of your wealth.
At Webster & Dubs, we can consult with you to see if a Medicaid Asset Protection Trust is right for you. Together with other professionals, we can also help with financial planning, Medicaid applications, insurance and investment analysis, and other long-term care and estate planning matters. Call now to set up a free consultation: 716-854-2050
Daniel Webster is a founding partner of Webster & Dubs, P.C. where he practices elder law, real estate, estate planning, and debtor protection. Prior to co-founding Webster & Dubs, Daniel Webster was a staff attorney at The Center for Elder Law & Justice.