Q: Is my house exempt if my spouse or I need long-term care Medicaid?
A: After working most of your life and finally paying off your mortgage, the last thing you want is to see the assets you’ve accumulated through years of diligence fall into the government’s hands because you required long-term care either at home or in a nursing home. There is a way—a perfectly legal and legitimate way—to shield those assets and protect your children’s inheritance. But there’s really no time to lose. One of the ways in which we protect assets is by creating a Medicaid Asset Protection Trust (MAPT).
With a MAPT, you can protect your assets from the cost of long-term care. But there is a hitch: The trust must be created sixty (60) months before nursing home care is necessary. Currently, in New York, there is no lookback for transfers made before you apply for home care or Community Medicaid. However, this may change. In 2020, regulations were changed to apply a thirty (30) month lookback for Community Medicaid for any transfers made after October 1, 2020. However, the State has not imposed that lookback and have delayed applying it until at least 2025. At the writing of this article, we are unsure if this will ever be implemented. To be safe, planning early is imperative and the key to asset protection and preservation.
Under the 2024 Medicaid resource allowance, the application can have $30,182.00. If you have assets that exceed that amount, there could be a spenddown. If you do nothing, you could lose your home and investment assets. If you establish a MAPT – and stay out of a nursing home for sixty (60) months – those assets are out of the government’s reach and will be there for your benefit and ultimately, your beneficiaries.
A Medicaid recipient can have non-qualified assets up to $30,182.00, retirements accounts in an unlimited amount (provided those accounts are set up for a specific monthly distribution), an irrevocable pre-paid burial and a car. If the Medicaid recipient is receiving Community Medicaid, the recipient can own their primary residence; however, if the primary residence is in the recipient’s individual name at death, there will be recovery for the benefits paid by Medicaid during the recipient’s life. This recovery can be avoided if the primary residence is held in a MAPT when the recipient passes.
What happens if your house is in a trust, and you decide to move: No problem. The trustee can sell the house and then the proceeds can be used to buy another home or simply invested to pay you income from the trust. Similarly, if you put your stock investments in the trust, the trustee can buy and sell securities in the trust. The new home and the new stock stays in the trust. The grantor of the trust keeps all the income, and the principal is protected.
Trusts can be legally complicated, and if you do decide to investigate a MAPT, it’d be wise to consult with an attorney who specializes in that area of law and keeps a close watch on statutory changes that may affect the operation of the trust.
Hon. Gail Prudenti is a Partner at Burner Prudenti Law, P.C. focusing her practice on Trusts and Estates. Burner Prudenti Law, P.C. serves clients from New York City to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.