What is A Medicaid Asset Protection Trust?
A Medicaid Asset Protection Trust (MAPT), also known as an irrevocable trust, grants the possession of your assets to a trustee, whose sole responsibility is to distribute them to beneficiaries upon the death of the Grantor (the creator of the irrevocable asset protection trust). In creating a NY asset protection trust, your assets are protected from creditors and can not be touched during your life or after your death.
How can a NY Medicaid Asset Protection Trust Lawyer help?
A NY Medicaid Asset Protection lawyer can help protect your assets from nursing home costs and make you eligible for Home Care Medicaid by following these two Asset Protection steps:
- Set up an Irrevocable Trust for your assets. An entity known as an irrevocable trust has a separate tax ID from the IRS files a separate tax return. Since the Irrevocable Trust creator (Grantor) can no longer access the trust assets, the grantor becomes Medicaid eligible.
- Set up a Pooled Income Trust for your resources. A pooled income trust is set up to protect a Grantor’s monthly excess income and preserve such income for eligible Medicaid expenses. With a pooled income trust, an individual is able to lower their total monthly income and be within the allowable income limit that Medicaid requires. The excess income is deposited with a special Pooled Income Trust company in NY which uses this extra income to pay for the grantor’s expenses that include rent, utilities, telephone and cable bills.
What Assets Can I Keep to Still Qualify For Medicaid in NY for 2024?
When qualifying for Medicaid in New York, an individual is still able to keep:
- Liquid Assets up to $30,182 for an individual and $40,821 for two people.
- Primary Residence Value of up to $1,071,000
- Funeral and Burial Funds that don’t exceed $15,000 per person
- One car regardless of make and price that must be used for transportation
- The Life Insurance policies can’t go over a combined cash value of $1500
Why Should I Apply for Medicaid In NY?
The primary benefit of the Medicaid Asset Protection Plan in New York is that you are able to avoid the hefty costs of long-term care in the case that you need it and be eligible for NY Home care aid. Paying out of pocket for this time of care can become costly very quickly. Creating a NY Medicaid asset protection plan will allow you or a loved one to avoid the expensive nursing home bills that could come your way while also protecting your life long assets from creditors that you have worked hard to earn.
Does a NY Asset Protection Trust Avoid Will Probate?
By drafting a NY Asset Protection Trust, you are able to bypass the process of probate. Essentially probate is the process in which a Surrogate's Court in NY must authenticate a will and make sure that it is valid and enforceable. NY Probate attorneys are also very expensive, with an average cost ranging from $500-$1,000 per hour. By setting up an Irrevocable Trust in NY your loved ones will have immediate access to your assets upon your death.
Can an Asset Protection Trust Make Me Eligible for Medicaid in NY?
In transferring your assets into an irrevocable trust in NY, assets are not only protected from potential creditors, but are also not counted as yours for medicaid eligibility. NY law currently allows one to apply for NY Community Medicaid without any look-back provision.
Can I Just Transfer My Assets To My Children?
You may be asking yourself, “Why draft a trust when I can simply transfer my assets to my children?” There are many potential downsides to transferring your Assets to your children. First, minor children can not own any assets on their name until they reach the age of majority - in NY, 18 years of age. Second, in the process of divorce or bankruptcy the assets transferred to children are considered theirs and will be subject to children’s creditors. Third, seeing as though the assets are technically no longer “yours,” your child now would have full control over the assets. This means your child can use your money for his or her own personal needs.
Are there Tax benefits to Drafting a Trust in NY?
Drafting a trust allows for major tax benefits to the beneficiary of said trust. This is because New York state tax code provides for a “step-up” basis. What this means is that if a home is transferred to a beneficiary after the death of the donor, the capital gains tax paid by the beneficiary will only have to be paid on money made over the fair market value of the property at the time of the donor's death. Essentially if you transfer a home to your child that you paid $100,000 for 20 years ago, and then they sell the home for $700,000, they will be forced to pay taxes on the $600,000 capital gain. By drafting a trust, your home would be transferred to the trust and then to your child after your passing. Upon the transfer of the property to the beneficiary (your child or relative ), it would receive a stepped-up basis in which it would be found that the current fair market value of the home is $700,000. Your child would then be able to sell the home whilst only paying capital gains tax on the house if sold for over the $700,000 fair market value appointed.
Is an Asset Protection Trust part of your NY Estate Plan right now?
An asset protection trust allows for a specific assets allocation upon a Donor’s death avoiding probate. In simple terms, your assets are transferred into the trust during your life and are distributed to the beneficiaries directly upon your death avoiding Probate proceedings necessary for the will to undergo. This provides a swift transfer of assets, avoiding added hardship during the mourning period.
Hire a NY Asset Protection Attorney
If you or a loved one need help creating an estate plan, and protecting your assets, contact the Law Office Of Inna Fershteyn. Attorney Inna Fershteyn is a great estate planning attorney with over 22 years of experience. For a comprehensive asset protection advice and to discuss setting up an asset protection trust, call (718) 333-2394.