For families facing the rising cost of long-term care, Medicaid can be a lifeline—but eligibility often requires individuals to spend down their assets to poverty levels. Similarly, families caring for loved ones with disabilities worry about how to provide for them without jeopardizing access to vital government benefits.
This is where Medicaid Asset Protection Trusts (MAPTs) and Special Needs Trusts (SNTs) come in. Both tools are essential in elder law and estate planning, helping families protect assets while ensuring continued access to care and support.
1. The High Cost of Care
Nursing home care averages $8,000–$12,000 per month, depending on location.
Without planning, many families spend down life savings within just a few years.
Medicaid is often the only realistic option for covering long-term care—but strict income and asset rules apply.
2. Medicaid Asset Protection Trusts (MAPTs)
MAPTs are designed to safeguard assets while positioning individuals for Medicaid eligibility.
Key Features:
- Assets transferred into the trust are no longer "countable" for Medicaid purposes.
- Must be irrevocable—the person setting it up gives up direct control.
- Subject to Medicaid's 5-year look-back rule: transfers must be made at least 5 years before applying for Medicaid.
Benefits:
- Protects family home and savings from being consumed by care costs.
- Allows heirs to inherit assets instead of losing them to Medicaid recovery.
- Provides peace of mind knowing future care is secured.
3. Special Needs Trusts (SNTs)
SNTs allow families to provide financial support for a loved one with disabilities without disqualifying them from SSI or Medicaid benefits.
Two Main Types:
First-Party SNT: Funded with the beneficiary's own assets (e.g., inheritance, settlement). Medicaid must be reimbursed upon the beneficiary's death.
Third-Party SNT: Funded by parents, grandparents, or others. No Medicaid payback requirement, allowing assets to pass to other heirs.
What They Pay For:
SNT funds can cover expenses beyond basic needs provided by government benefits, such as:
- Education, therapies, recreation
- Transportation and travel
- Personal care attendants
- Technology and adaptive equipment
4. Combining Trust Strategies
Many elder law attorneys use MAPTs and SNTs together in comprehensive planning. For example:
- Parents establish a MAPT to protect their own assets from nursing home costs.
- They also create a Third-Party SNT to ensure their disabled child is provided for after their death.
This combination ensures both Medicaid eligibility for the parents and lifetime care for the child.
5. Common Pitfalls to Avoid
- Waiting too long to set up a MAPT (less than 5 years before care is needed).
- Naming the wrong trustee—trusts should be managed by someone reliable and financially savvy.
- Attempting DIY trusts without legal guidance, which can result in Medicaid ineligibility or IRS problems.
6. Best Practices for Families
- Start planning before a crisis—the earlier the better.
- Consult an elder law attorney to draft trusts tailored to your state's laws.
- Revisit trust planning after major life changes (marriage, divorce, disability diagnosis, inheritance).
- Keep good records of trust funding and distributions.
The Importance of Professional Guidance
Both Medicaid Asset Protection Trusts and Special Needs Trusts involve complex legal requirements that vary by state. Working with an experienced elder law attorney ensures:
- Compliance with federal and state regulations
- Proper trust drafting that achieves your goals
- Ongoing management guidance for trustees
- Coordination with other estate planning tools
Learn more about how trusts can be an effective part of your comprehensive estate planning strategy, or explore our estate planning services to see how we can help protect your family's future.
Conclusion
Medicaid Asset Protection Trusts and Special Needs Trusts are powerful tools that allow families to balance two critical goals: securing access to vital care and preserving assets for future generations.
With proactive planning, you don't have to choose between protecting your life savings and ensuring your loved one receives quality care.
At Elder & Estate, we help families design Medicaid and Special Needs Trust strategies that safeguard both financial security and dignity. Contact us today to begin planning for the future.
