What Are Medi-Cal Asset Protection Trusts?
Medi-Cal imposes strict rules on how much money and assets an applicant can have. To qualify for Medi-Cal, you must fall under the asset limit, which is $2,000 in most states.
Even with greater than $2,000 in assets, however, you may be able to get on Medi-Cal by establishing a Medi-Cal Asset Protection Trust (MAPT). When you put your assets in a MAPT, Medi-Cal will not count the money in the trust toward its resource limit.
Using Medi-Cal Asset Protection Trusts to Transfer Assets
After you create a Medi-Cal Asset Protection Trust, you no longer own the assets within it, allowing you to qualify for Medi-Cal following the five-year lookback period. People who are currently healthy but plan to go on Medi-Cal in the future might choose to use this Medi-Cal planning strategy.
It is essential to understand that MAPTs are irrevocable: Once you make the trust, you cannot change your mind and take those assets back. Your trust must be irrevocable for you to qualify for Medi-Cal because it means that you no longer own or control these assets.
In contrast to MAPTs, many types of revocable trusts, such as family trusts, are often ineffective in preparing for Medi-Cal. Having the power to revoke your trust would allow to retain control over your assets, and Medi-Cal would count the contents of your trust as part of your resources.
Creating a Medi-Cal Asset Protection Trust
Three parties are involved in a MAPT: the grantor, the trustee, and the beneficiary. When you make a trust, you become the grantor, the person who places assets into the trust. The trustee manages the trust, and the beneficiary — or beneficiaries — will receive your assets.
If you want your MAPT to ensure you qualify for Medi-Cal, you must name someone other than yourself or your spouse as the beneficiary. Designating yourself as the beneficiary would mean giving yourself assets, which Medi-Cal would count toward its asset limit.
You can, however, select your children or parents as beneficiaries. Using a MAPT, you can also make sure they get those assets when you pass away.
What Can You Place in a Medi-Cal Asset Protection Trust?
As part of your Medi-Cal planning strategy, you can place many types of assets in a MAPT, including:
Checking and savings accounts
Stocks and bonds
Mutual funds
Certificates of deposit
Real estate that is not your primary residence
In most states, your home
Although many states allow you to place your home in MAPT so that it will not count toward Medi-Cal’s resource limit after five years, Medi-Cal regulations vary by state. In Michigan, for example, placing your home in a MAPT will not prevent it from counting toward the asset limit.
Benefits and Drawbacks of Medi-Cal Asset Protection Trusts
Medi-Cal Asset Protection Trusts offer several benefits to individuals planning to apply for Medi-Cal:
MAPTs preserve generational wealth, safeguarding assets for family members.
After you pass away, the state cannot take your assets from your beneficiaries to reimburse them for your long-term care, as MAPTs avoid probate.
Since nursing home fees can be exorbitant, MAPTs can save your family money, as they let you qualify for Medi-Cal once the lookback period has ended.
The drawbacks of MAPTs include the following:
Once you establish a MAPT, you forfeit the control and use of your assets. If you need money, you will not be able to draw from the trust.
The fees associated with preparing a MAPT can be costly, ranging from $2,000 to $12,000.
Speak with your attorney to learn about how using a Medi-Cal Asset Protection Trust could help you plan for your future.
ElderCounsel, the creator of Medi-Cal Asset Protection Trusts (MAPTs), offers them on its website.
Contact us
Elise Lampert, Esq.
Law Office of Elise Lampert
9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212
Phone: (818) 905-0601 / Email: elise@elampertlaw.com
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