Medicaid Asset Protection Trust (MAPT)

What Makes a Medicaid Asset Protection Trust Different from Other Trusts?

A Medicaid Asset Protection Trust (MAPT) is designed specifically to shield assets from Medicaid’s countable asset calculation. By placing assets in a MAPT, they are no longer considered owned by the applicant, which can help someone who is over the asset limit qualify for long-term care Medicaid—whether at home or in a nursing facility. MAPTs also ensure that assets can be preserved for children or other heirs, making them a dual-purpose tool for eligibility and inheritance protection. You may also hear them called Medicaid Planning Trusts, Medicaid Trusts, or Home Protection Trusts.

Not all trusts offer Medicaid protection. For example, revocable living trusts generally do not work for Medicaid planning because the trustmaker retains control or access to the assets. If Medicaid can see the assets as available, they must be spent down before eligibility is granted.

Why Are Medicaid Asset Protection Trusts Important?

In most states, a single applicant’s asset limit for long-term care Medicaid hovers around $2,000, though the exact figure varies. Some assets—like a primary residence, one vehicle, or wedding rings—are exempt. Still, many applicants find themselves over the limit without enough income to pay for care. MAPTs provide a way to reduce countable assets without selling or spending them, allowing seniors to both qualify for Medicaid and keep wealth in the family.

How Do Medicaid Asset Protection Trusts Work?

The person creating the trust is the grantor (or settlor). The trust is managed by a trustee, who must be someone other than the grantor or their spouse—often an adult child or relative. The trustee follows strict rules on how trust assets can be used and cannot use them for their own benefit. A beneficiary is named to receive the remaining assets after the grantor’s death. For Medicaid purposes, the beneficiary cannot be the grantor.

To be Medicaid-compliant, the trust must be irrevocable, meaning its terms cannot be changed and the assets cannot be reclaimed. Once assets are in the MAPT, they are no longer legally owned by the grantor and therefore not counted by Medicaid—provided the trust was set up outside the look-back period.

Why Does Timing Matter with MAPTs?

Most states enforce a 60-month Medicaid look-back, during which transferring assets into a MAPT can trigger a penalty period of ineligibility. California is an exception, having eliminated its asset limit as of January 1, 2024, and thus no longer applying the look-back for asset transfers made after that date. New York also has unique rules, with no current look-back for home and community-based services (though one is planned for the future). MAPTs are best set up when Medicaid is not expected to be needed for at least five years.

What Are the Main Benefits of a MAPT?

• Qualifies the applicant for Medicaid without depleting savings.
• Protects assets from Medicaid Estate Recovery after death.
• Ensures wealth passes to intended beneficiaries instead of being used for care costs.
• Can include income-producing assets, allowing the grantor to still collect income (as long as it doesn’t exceed Medicaid’s income limit).

Are There Drawbacks?

MAPTs are not a quick fix for someone who needs Medicaid right away. They require advance planning, have legal costs ranging from $2,000 to $12,000, and once assets are in the trust, the grantor loses direct control. They’re generally recommended when assets exceed $100,000—smaller estates may benefit from other strategies.

Gifting vs. Using a MAPT: Which is Better?

Gifting assets may seem simpler, but it also violates the look-back period and can create tax consequences like capital gains. A MAPT offers more control and protection from estate recovery, though it requires legal drafting.

What Can You Put Into a Medicaid Asset Protection Trust?

Common assets include a primary residence (with exceptions—Michigan counts it as a non-exempt asset in a MAPT), other real estate, bank accounts, CDs, stocks, and bonds. Retirement accounts are generally not transferred due to tax implications. In most cases, the grantor may continue to live in a home held in the trust and, if necessary, the trust can sell it and purchase another property.

Do MAPT Rules Vary by State?

Yes—rules differ widely. California allows homes in revocable trusts to avoid estate recovery, which is unusual. Wisconsin permits some irrevocable trusts to be modified or cancelled if all parties agree. These differences make it essential to work with someone who knows the local Medicaid rules.

Do You Need an Attorney to Set Up a MAPT?

Given the complexity and state-specific rules, MAPTs should be drafted by an attorney experienced in Medicaid planning. A poorly written trust could make assets countable and derail eligibility. Many Medicaid planners work alongside attorneys to help clients keep costs manageable.

What Does It Cost to Create a MAPT?

Costs typically range from $2,000 to $12,000, depending on the complexity of the trust, the value and type of assets, and whether the trust is part of a larger estate planning package. While the price may seem steep, it can save hundreds of thousands in nursing home costs, which average over $8,600 per month nationwide.

What Are the Alternatives to a MAPT?

For those with fewer assets or immediate Medicaid needs, other options may be more suitable. These include spending down on exempt assets, setting up an Irrevocable Funeral Trust, purchasing a Medicaid-compliant annuity, or using income-lowering strategies like Qualified Income Trusts.