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Do you have any personal experience with Medicaid Asset Protection Trusts (MAPTs)?
To those unfamiliar, MAPTs are irrevocable trusts designed to preserve family’s assets while maximizing an applicant’s chances of qualifying for Medicaid.
Would love to hear your thoughts on this!
These can be abused by family members so be very, very careful.
You need to be very careful who controls an irrevocable trust. They could deny you (if you are the one subjected to the inheritance that way) or your intended recipient, the use of the money.
Our family is gong through that right now. My mom decided to leave her money to my two sisters in a regular trust and to me in one of these. She left my sister in charge and they have made comments over the years of “you deserve to be homeless” (I had gotten cancer in grad school, dad decided to help me paying a part of my rent as student health insurance had unlimited out of pocket and I had to take out substantial loans to pay for medical care; dad helping me is what prompted my two sisters to make that comment).
My two sisters will inherit this when I die (so an inherent conflict of interest) and so far have refused to allow me to withdraw anything. Even when the trust says I can do it for specific purposes and it was for those purposes I wanted to withdraw the money. The trust also says if anyone contests this then they are treated as dead and lose their inheritance.
What was ironic is the trust was written when I had finished my PhD, was an assistant professor for 18 months and so wouldn’t be using public services ever again (I had SNAP prior to then when I had cancer but couldn’t get medicaid as i was a student thus a ton of student loans public and private). My SS alone is higher than the limits for any public services, let alone adding in RMD’s. The trust was written from the point of view of making sure I still had assets if I had public services except I will never qualify for them and my sisters are refusing to allow me to spend any of the money.
What this has effectively done is cut me out of any family inheritance and meant that my sisters will get my share because if I contest anything about it I automatically lose the money. Don’t do that to your family. You may be unaware of the way family will behave when significant money is involved after your death. Make sure whomever administers the irrevocable trust will not benefit if any money is left and has no incentive to mistreat the recipient by denying them funds. Family dynamics can be very destructive and parents may not be aware of them.
Thank you for bringing this up, Bogdan. Spouse’s father just passed and they had a trust that is supposed to become an irrevocable trust after his death. Spouse is supposed to be a trustee. We haven’t gotten any paperwork yet to see what being a trustee will entail.
We were also wondering why they would do this for Medicaid planning purposes when they have plenty of income and wouldn’t need a Medicaid nursing home? And is it moral? Chris
See my post below.
I don’t have experience with MAPT, but did use a Supplemental Needs Trust for an elderly parent that did end up on Medicaid in a nursing home setting, after several years in assisted living. The move to a nursing home was needed due to a higher need for nursing care. The SNT use was suggested by the family’s elder care attorney, and it worked out the way the attorney said it would to qualify for Medicaid. The SNT preserved the assets for the family members use, but they did not own the assets. Use of a SNT may not work for all families, but it did for us. The SNT was created upon the death of one parent who had the family assets in their name at their passing.