The Medicaid Asset Protection Trust (''MAPT'')

For those who don't qualify for long-term care insurance or can't afford it, The Medicaid Asset Protection Trust ("MAPT") can protect your assets from the high cost of long-term care in your home or in a facility.

The MAPT sets up two roadblocks that Medicaid cannot break through. First, you cannot be your own trustee. Usually, one or more of the adult children act as trustee.

Secondly, you, as the creator of the MAPT, are entitled to the income only, not the principal. If you don't have access to the principal (your home or other assets in the trust), then Medicaid doesn't have access to the principal. The MAPT makes good sense for assets you're not going to spend – like your home and investments you're not using. As we often say, if you don't need it to live on, then why not protect it for your family instead of losing it to pay for long-term care.

When you apply for Medicaid for nursing home care, if you've transferred any assets in the past five years, you are ineligible. The full protection of the trust only takes place five years after you establish the trust. This is why you want to plan ahead. Under new rules to take effect this Summer, you will also need to have the MAPT in place two and half years in advance to be eligible for care in your own home.

The MAPT does not affect your lifestyle. You still receive your pension, social security checks, minimum distributions on your retirement plans, interest and dividends. You have the exclusive right to use and enjoy your home. You keep all your property tax exemptions. You can sell your house, buy a new one, or invest the proceeds, which remain in the trust, still protected.

The MAPT is also flexible. You can change trustees and you can change who you leave it to.

Although the MAPT is an irrevocable trust, not only does it have the flexibility mentioned above, but in New York there is a mechanism to revoke an irrevocable trust. All that is required is for all parties, you and your children, to sign. We even have a workaround just in case one of the children refuses to sign.

Whether you look into long-term care insurance or the MAPT to protect your assets from long-term care costs, it's never too early to start inquiring. Protecting your assets for your family is up to you.