How to Set Up a Medicaid Asset Protection Trust in Maryland

Properly setting up a Medicaid Asset Protection Trust (MAPT) can ensure Medicaid doesn’t count assets against you when assessing if you qualify. Not following the right steps or setting up this trust early enough before applying could threaten your eligibility.

MAPTs are set up as irrevocable trusts, with our attorneys writing the declaration of trust documents. Grantors/applicants pick trustees, transfer asset ownership to trusts, and can’t change ownership once the trust is made If your assets are above limits for applying, you can put them in a trust instead of spending them down, but you typically must do so at least 5 years before applying.

For a free and confidential case review from Rice Law, call our Maryland wills and estate planning lawyers today at (410) 694-7291.

How Can You Set Up a Medicaid Asset Protection Trust in Maryland?

Medicaid Asset Protection Trusts can house assets and stop them from being counted as resources for Medicaid eligibility. Our attorneys can help you set up a MAPT by writing a declaration of trust document and transferring the necessary assets into the trust.

In a declaration of trust document, the grantor (you) transfers ownership to the trust. MAPTs are typically irrevocable, meaning it is very challenging to undo transfers.

When making a trust, you choose the trustee to manage it, like a close relative or adult child. Your spouse cannot be the trustee of your MAPT.

The goal of Medicaid Asset Protection Trusts is to avoid “spending down.” This is the process of depleting your savings or using assets to pay for healthcare expenses so you become eligible for Medicaid. In general, seniors looking to qualify for regular Medicaid need income under $350 per month and assets limited to $2,500.

If you don’t put assets into a MAPT, you might have to spend them until you are under the limits to get Medicaid. If we instead set up a MAPT according to the rules for irrevocable trusts, assets in it won’t count against you for Medicaid eligibility.

If you do spend down assets, you must spend that money on qualifying medical care; you cannot just give money away so you meet standards.

You can still benefit from assets in your MAPT, such as getting income from your investments. We can structure the MAPT to pay you but keep you below income and asset limits for Medicaid eligibility.

When Should You Set Up a Medicaid Trust in Maryland?

Planning ahead will let you use a MAPT to its full effectiveness. Our Baltimore wills and estate planning lawyers can create your Medicaid Trust at least five years before you apply for Medicaid, if not earlier, to avoid penalties.

Medicaid’s “look-back period” begins when you apply for benefits. Asset transfers or gifts made during the five years before applying might be scrutinized.

Though you can plan in advance using a MAPT, doing so too close to when you apply for benefits could be seen as you trying to game the system by hiding assets you could have used to pay for healthcare expenses.

Because of the five-year look-back period, you should set up your MAPT long before you apply for Medicaid, particularly if you apply for nursing home services. Otherwise, you could be deemed ineligible for an indefinite period.

Remember, MAPTs are irrevocable trusts. If you place assets into one, apply for Medicaid too soon, and are denied, you might be unable to access those assets to help pay for your healthcare expenses.

Some transfers are exempt from the look-back rule, like transfers to your spouse, a child with a permanent disability, or a caregiver child. Penalties are sometimes waived if imposing them would cause undue hardship, like if a Medicaid applicant no longer has access to any meaningful resources after putting them in a MAPT.

What Assets Can You Put in a Medicaid Asset Protection Trust in Maryland?

You can put virtually any countable assets into a Medicaid Asset Protection Trust to avoid spending down your cash or assets to qualify for Medicaid.

Medicaid typically doesn’t view primary residences as countable assets, so there’s usually no need to put your home into a MAPT. Additionally, Medicaid lets you exempt one car on top of many household and personal items.

Countable assets we can put into MAPTs include rental properties or second homes, cash, bank accounts, stocks, bonds, and investments. When setting up a MAPT and reviewing your different assets, we’ll also dictate how the trustee should handle them. This trustee will be responsible for making distributions from the trust to you and other beneficiaries .

By putting your assets into a MAPT before applying for Medicaid, you not only avoid spending them down but also bypass probate. When you die and leave an inheritance through a will, it goes to court and is taxed. A trust can leave assets to your beneficiaries .

The founding documents can dictate who the MAPT goes to after you pass.

Call Our Lawyers for Help Setting Up a MAPT in Maryland

Get a free case assessment from Rice Law when you call our Columbia, MD wills and estate planning lawyers at (410) 694-7291.