919-659-8433

Medicaid Asset Protection Trusts in North Carolina

Cary, NC Elder Law Attorney

Nursing home costs are expensive and only getting worse. In Cary, North Carolina, the average monthly cost of skilled nursing facilities is in excess of $6,000 each month. And while the average person plans pretty adequately for their retirement, very few plan adequately for a disabled retirement or the costs of privately paying for skilled nursing services later in life. For many people, Medicaid Long-Term Care coverage is their only option for funding their medical care. But Medicaid coverage comes at a cost: Medicaid Estate Recovery.

Medicaid Estate Recovery

Many people who receive Medicaid Long-Term Care (LTC) coverage will still owner a variety of non-countable assets while they are receiving benefits – most often their family home. Even though a home is non-countable, if the home is still owned after the Medicaid recipient passes away, the North Carolina Division of Medical Assistance (North Carolina’s Medicaid) is entitled to seek a recovery of all amounts paid by Medicaid on behalf of the recipient from the recipient’s estate. Most often, the house is one of the only assets remaining. This results in the surviving family members having to sell the house just to pay Medicaid back. The family is left with nothing to remember the loved one by, and the family home is lost forever. But it doesn’t have to end that way.

Medicaid Asset Protection Trusts

If used properly, Medicaid Asset Protection Trusts can help Medicaid applicants keep their home a non-countable asset, but also remove the home from their estate and potential Medicaid Estate Recovery. In addition to shielding the asset from Medicaid Recovery, the MAPT has a number of benefits:

  1. Instead of transferring the home to a child or relative, and thus making it legally theirs and exposing the home to the creditors or divorce of that individual, transferring the home to an irrevocable Medicaid Asset Protection Trust allows the applicant to protect the house from creditors and maintain use of the house;
  2. A MAPT also allows you to keep control of the asset without keeping ownership. While the applicant cannot have direct control over the asset itself (only the trustee will have control), MAPTs allow the applicant to remove and replace the trustee; and
  3. The applicant can also continue to live in the house and collect any income from the trust, if any.

Utilizing a MAPT as Part of your Medicaid Planning Strategy

Medicaid Planning should not be taken lightly. Any sort of manipulation of asset ownership can potentially harm the Medicaid eligibility of the applicant and should only be done under the advice and supervision of an experienced North Carolina Elder Law Attorney. Additionally, MAPTs are not for everyone and should be used in specific circumstances and only if the applicant is likely to not need Medicaid for at least 5 years following a transfer to the trust.

Paul Yokabitus