A woman once came into my office worried about what would happen if her husband needed nursing home care. They’d saved, paid off their house, and done everything “right.” Then she watched her neighbor lose nearly everything to long-term care costs and thought, “Are we next?”
She wasn’t wrong to worry. Long-term care is one of the biggest financial landmines in retirement. We’re talking $50,000 to $100,000 per year, often for two to five years. That’s decades of savings gone in a flash. Add in the fact that 70% of people will need some kind of long-term care, and the question isn’t if you’ll need it, but how you’ll pay for it without blowing up your legacy.
How Medicaid Works (and Doesn’t)
Medicaid can cover long-term care, but only after you’ve spent down nearly everything you own. Sure, you’ll get the care, but your family may be left with next to nothing. That’s where a Medicaid Asset Protection Trust (MAPT) comes in.
How a Medicaid Asset Protection Trust Works
By transferring certain assets into a MAPT, you protect them from being counted when Medicaid looks at eligibility. Translation: you can qualify for care without draining your estate dry. But there are rules:
- The trust must be irrevocable, meaning once assets are in, you can’t just pull them back out.
- Medicaid has a look-back period, so this must be set up well before you need care.
- Done properly, you may still benefit in limited ways while keeping the bulk safe for your heirs.
MAPTs are especially useful for things like real estate or investments outside retirement accounts. Not everyone needs one, which is why you shouldn’t wing this—you need a lawyer who knows what they’re doing.
Extra Perks Beyond Medicaid
A MAPT can also help with:
- Estate taxes: The current exemption is high but scheduled to drop. A trust can reduce exposure.
- Control over inheritance: You decide when and how heirs receive funds, whether that’s age milestones, annual distributions, or keeping assets protected in divorce.
Is It Worth the Cost?
Setting up a MAPT isn’t pocket change. You’re looking at $7,000 to $12,000 depending on complexity. But compared to losing hundreds of thousands to nursing home bills, it’s a bargain.
Plan Ahead, Protect Your Legacy
The woman who came to me set up a MAPT. Years later, when her husband needed nursing care, their home and savings stayed safe. Her kids got the inheritance they worked for, and she got peace of mind.
If you’re concerned about long-term care draining everything you’ve built, the time to act is now. At Rosenberg Law Firm, we help families decide if a MAPT makes sense for them. Request a Consultation or Register for a Workshop today and make sure your savings don’t become the nursing home’s inheritance.