What is a Medicaid Asset Protection Trust (MAPT)?
Many people think they can avoid any formal estate planning and still become eligible for Medicaid. The biggest mistake people make is transferring assets to children, typically, the family residence. Several problems are created:
- If the transfer takes place three years before you need to enter a nursing home, Medicaid will deny coverage in a five year look back.
- If an adult child lives with their parent for at least two years before nursing home is needed, it may be possible to transfer the home based on the Child Caregiver Exception.
- The house is now in the child’s name. If the child divorces, the value of the house may be divided between her and her ex. Or, if there is a financial problem, the house is an asset and creditors could put a lien on the house.
Homeowners who want to leave an inherited home for their family are often faced with the question of whether they should deed their house to their adult children while retaining a life estate or should a Medicaid Asset Protection Trust (MAPT) be used to protect the asset?
Here are a few things to consider: If you become a Medicaid recipient.
If the home is sold prior to the death of the Medicaid recipient, it will be required that the proceeds of the sale be used towards their care.
If the house is rented, the net rent collected is required to be paid to the nursing home facility.
Families often find themselves in a situation where they are forced to maintain a vacant house for multiple years to ensure that they do not lose the financial benefits of an inherited home.
If you have a home that you would like to preserve for your family, it might be worth considering drafting a Medicaid Asset Protection Trust (MAPT). It’s the best way to make sure that your family is able to reap the full benefits from the inherited home.
Do you have an inherited home that you need to sell? You need a real estate agent who specializes in working with inherited home sales. Call 631-357-4819 for a free consultation.