Medicaid Asset-Protection Trusts (MAPTs)

What a MAPT is

A Medicaid asset-protection trust (MAPT) is an irrevocabletrust designed so that the assets it holds are not counted as available for Medicaid eligibility and are shielded from later estate recovery. The grantor transfers assets — often the home and investments — into the trust, names someone else as trustee, and relinquishes the right to reach the trust’s principal. Because the assets are no longer legally available to the grantor, the state does not count them once the lookback has passed.

What you give up, and what you can keep

The protection comes from the surrender of control, so the trade-off is real. The grantor generally cannot serve as trustee with control over principal, cannot revoke the trust, and cannot demand the assets back. But a well-drafted MAPT can still preserve important benefits: the grantor can often retain the right to the income the trust generates, the right to live in the home for life, and a limited power of appointment to change who ultimately inherits — while keeping the principal out of reach for Medicaid purposes. The art is retaining enough to be comfortable without retaining so much that the assets become “available” again.

The five-year clock

Funding a MAPT is a transfer, so it starts the five-year lookback. Assets moved into the trust are protected only after 60 months have passed; apply for Medicaid within that window and the transfer triggers a penalty period. This is why a MAPT is fundamentally an advance-planning tool — its power depends entirely on being set up well before care is needed. A MAPT created the month a parent enters a nursing home protects nothing in time.

Preserving the basis step-up

A common fear is that moving appreciated assets — especially a long-held home — into an irrevocable trust forfeits the date-of-death basis step-up, saddling heirs with a big capital-gains bill (recall how the step-up works). A properly drafted MAPT usually avoids that. By having the grantor retain certain powers — for example, a limited power of appointment or a retained life interest — the trust assets remain includible in the grantor’s gross estate under IRC § 2036, which means they still receive the step-up at death under IRC § 1014 — even though they are not counted for Medicaid. Being in the estate for the step-up and out of reach for Medicaid are two different tests, and a good MAPT threads them.

When it’s the wrong tool

A MAPT is not for everyone. It is the wrong choice when care may be needed within five years (the clock won’t run in time), when the grantor may need access to the principal (irrevocability forecloses that), or when the estate is small enough that simpler exempt-asset planning would do. And because MAPT rules and their treatment vary by state, the same trust language does not work everywhere. It is a powerful tool for the right person at the right time — and a costly mistake for the wrong one.

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