Can I Change the Terms of a Medicaid Asset Protection Trust?
If you are beginning to think about long-term care planning, you may be considering creating a type of trust known as a Medicaid asset protection trust (MAPT). For many middle-class and even higher earners, it is important to be able to plan for Medicaid to cover the cost of long-term care in a nursing home — if you end up needing it — due to the very high costs of nursing home care. Otherwise, you could potentially need to spend down a lifetime of savings and assets in order to cover the costs of a multi-year stay in a nursing home. Rather than having to put all of your assets toward nursing home costs, you may be able to place those assets in a trust to avoid them “counting” toward Medicaid eligibility.
Yet in order for a MAPT to function, it must be established well before the settlor (the person making the trust) actually requires long-term care in a nursing home. As such, some people who establish MAPTs may not ultimately end up needing Medicaid to cover nursing home costs (although many will). As such, you may be wondering: can I change the terms of a Medicaid asset protection trust, or can I cancel the trust later on? In short, you cannot. But this does not mean that you should not establish this type of trust. Our Norcross estate planning lawyers can explain in more detail.
Asset Protection Trusts Must Be Irrevocable
Any MAPT or other trust designed for purposes of asset protection must be set up as an irrevocable trust. Once an irrevocable trust is created, it cannot be altered or canceled at any point. Once the settlor creates the trust, any assets that they place in the trust are no longer theirs. This is the way an irrevocable trust works, and it is this element that allows a person to protect assets in an irrevocable trust — since the assets in the trust are not technically their own, they are not “countable” for purposes of Medicaid eligibility or accessible to creditors of the settlor.
Assets Held in an Asset Protection Trust Can Still Go to Beneficiaries
You may be concerned about establishing a MAPT or another type of trust for the purpose of asset protection since you may not be certain if you will need long-term care, or if your family members will still be able to inherit from you. It is important to know that Georgia does have Medicaid Estate Recovery (which allows the Georgia Department of Community Health) to recover expenses spent on you through Medicaid. However, if there is money left or Medicaid never pays for your long-term care, you will still name beneficiaries who can inherit from the trust depending on the circumstances.
Contact a Gwinnett County Estate Planning Lawyer
Trusts that are created for asset protection, including MAPTs, are irrevocable trusts. As such, once they are established, they cannot be amended or canceled. However, it is important to keep in mind that you will still be protecting these assets even if you do not end up requiring long-term care and Medicaid coverage for it. As we discussed above, Medicaid estate recovery in Georgia only involves the recovery of the amount that was spent on your long-term care by Medicaid. Accordingly, if you ultimately do not require Medicaid coverage to pay for long-term care, the assets in an asset protection trust can be distributed to your beneficiaries. An experienced Gwinnett County estate planning attorney at Bowman Law Firm can discuss this type of trust with you in more detail and can answer any questions you have. Contact our firm today for assistance.
Source:
medicaid.georgia.gov/programs/third-party-liability/medicaid-estate-recovery
