In most states, to qualify for Medicaid benefits, your total assets must fall under a very small asset limit (along the lines of just a few thousand dollars). For new Medicaid applications submitted in New York, the asset limit in 2026 is $32,532 for a single applicant and $43,781 for a married couple. An irrevocable Medicaid Asset Protection Trust (MAPT) can help New York residents protect assets, such as home equity, for their beneficiaries while allowing them to qualify for Medicaid benefits, such as long-term care.

How to protect your assets when applying for Medicaid

Strategies such as jointly owning a home with your children or attempting to transfer your home ownership to your children right before you become eligible for Medicaid do not work. Medicaid has a five-year look-back period. Transferring assets to your children or a trust will not work if it is done within this look-back period because Medicaid will look to see if any assets were sold or transferred for less than their fair market value. Medicaid also considers all jointly owned assets to count toward the Medicaid asset limit. These sort of strategies also may raise massive tax and asset protection concerns and should (seemingly) always be avoided.

Preplanning for the asset limit is a valuable part of a comprehensive estate plan. Many people choose to establish a MAPT to protect their financial resources and become eligible for Medicaid. When money and other assets are funded into a MAPT, and the lookback period had expired, they no longer count toward your Medicaid resource limit because you no longer own these assets. MAPTs can enable you to become eligible for Medicaid and protect your assets for your children and other beneficiaries.

What is a MAPT?

A MAPT is an irrevocable trust that is created during your (the grantor’s) lifetime. With a revocable living trust, you can modify the trust documents or even close the trust at any time. Because you have the power to make these financial decisions, a revocable trust will not protect your assets from counting toward your Medicaid asset limit. Medicaid will come after your revocable trust as part of your estate to pay your long-term care bills.

With an irrevocable trust, you transfer title to your home and other assets to the trust. You, as the grantor, no longer own the assets you transfer to the trust. The trustee, a person or organization you choose to manage your trust, will oversee the trust. The trustee cannot be the grantor or their spouse. Even though you no longer make financial decisions or legally own these assets in your MAPT, you can still benefit from your trust.

If your MAPT includes income-producing assets, you can collect on the income while the principal remains in the trust. However, most states have an income limit that you must stay under to qualify for long-term care. If you enter a nursing home, income from income-producing assets in your trust will be used to pay for your long-term care.

Your trustee can buy and sell assets in your trust without restarting the Medicaid five-year look-back period. You can also continue to live in your home while the trust owns it, as long as your trust documents state that you have the right to do so.  Your trust documents will likely hold you responsible for the costs of maintaining the home.

With a MAPT, you can designate beneficiaries and minimize your estate taxes, and your heirs can benefit from any capital gains tax advantages upon your death. Assets in your MAPT are revalued when you die, meaning your beneficiaries obtain what’s commonly referred to as a step-up in basis, instead of using your purchase prices for their going forward basis.

What are the drawbacks of a MAPT?

A MAPT is subject to Medicaid’s five-year look-back period. To make a MAPT work for you, you must preplan and establish it well in advance of needing long-term care.

Since a grantor transfers their assets to the trust, they no longer own them or have control over how they are used, however, they can select a trusted individual who’ll act as their trustee and administer the MAPT on their behalf. An irrevocable trust cannot be easily modified or revoked. A MAPT may not be a good choice if you will need to access your financial assets in the trust to manage regular expenses.

A grantor cannot be a beneficiary of a MAPT. If the grantor were a beneficiary or had access to the assets in the trust, Medicaid would consider the income and assets available to pay for their care.

In most states, MAPTs are not an effective estate planning tool for people who will be eligible for Medicaid within the next five years, there are other “emergency” Medicaid planning options which are more applicable.

MAPTs are complicated, and the rules for using them change frequently. We can help you correctly establish your MAPT and ensure it meets the state’s requirements

Contact us if you want to create a comprehensive estate plan to protect your property and accounts. Hiring an experienced estate planning attorney ensures that your plan aligns with specific state laws, giving you the best protection for your assets.