What Is the 5-Year Lookback for Medicaid in New Jersey? PART 3

This is a 4-Part Series on Medicaid Planning and the Lookback

Where Does a Medicaid Asset Protection Trust (MAPT) Fit In?

This is where proactive estate planning makes a huge difference.

A Medicaid Asset Protection Trust (MAPT) is a special type of irrevocable trust. Instead of giving assets directly to children, a person transfers assets into the trust:

• The assets are no longer in the client’s name.
• If the trust is drafted and funded correctly, those assets can eventually be treated as non-countable for Medicaid purposes.
• The client can still benefit indirectly – for example, by having the trust own the home while the client reserves the right to live there.

However, here’s the key:

Funding a MAPT starts the 5-year lookback clock.

If you transfer your home or investments into a MAPT today, and you need Medicaid four years from now, that transfer will still be inside the lookback period and could cause a penalty.

If you make it to five years and one day, the assets in the trust are typically considered protected for Medicaid purposes.

That’s why we say, over and over:

“The MAPT is a long-term planning tool, not a crisis tool.”

MAPT for Yourself vs. Third-Party Planning for Someone Else

It’s also important to distinguish between:

• A MAPT you create for yourself (you’re moving your own assets to protect them), vs.
• A third-party trust you create for someone else (for example, a parent leaving assets in trust for a disabled child).

A single person’s MAPT is about protecting their own assets from future long-term care costs and estate recovery. Those transfers can trigger the 5-year lookback.

A third-party trust (like a third-party supplemental needs trust) is often funded with someone else’s money for the benefit of a disabled beneficiary. Those transfers do not trigger a lookback for the beneficiary, because the beneficiary isn’t the one giving anything away.

This is one of those subtle but crucial distinctions we walk families through at Simon Law Group.

Stay tuned for Part 3 where we discuss If you’re already inside that 5 year lookback window.

**** This post is not legal advice.  Please seek qualified legal advice from an Attorney when handling potential estate planning or medicaid planning. ****

If you're looking for more information about Estate Planning or Medicaid Planning or Asset Protection, contact an experienced Estate Planning Attorney, Simon Law Group LLC for a free consultation by calling 800-709-1131 or TEXT us at 908-864-4450