At Alatsas Law Firm, we understand that protecting what you've worked hard for while planning for future care needs keeps many Brooklyn and Queens families awake at night. Your concerns about preserving your Park Slope home or Forest Hills assets while ensuring you can get the medical care you need are completely valid. When long-term care insurance becomes too expensive or simply isn't available, a Medicaid asset protection trust often becomes your best path forward.
We've been helping families since 1996, and we know that understanding what a Medicaid asset protection trust actually means can feel overwhelming. Here's what we want you to know: this irrevocable trust helps shield your assets from the five-year Medicaid lookback period that applies to nursing home care in New York. Even better, a properly set up trust keeps the full capital gains tax exclusion on your primary residence—that's $250,000 per spouse.
Of course, timing matters tremendously. If you set up your trust less than five years before needing care, you might still face significant out-of-pocket costs for your long-term care. That's why we always tell our Bay Ridge and Astoria clients to think about this sooner rather than later.
Your trust means everything to us, and we're committed to looking out for you and your loved ones. We'll walk you through the benefits and drawbacks of MAPTs in New York, show you how they compare to other ways to protect your assets, and help you make the decision that's right for your family. After working hard your whole life, you deserve to have peace of mind knowing your wishes will be followed and your family will be taken care of.
What is a Medicaid Asset Protection Trust and how does it work in New York?
For families throughout Astoria, Bay Ridge, and other New York communities, a Medicaid Asset Protection Trust offers a specialized way to protect your assets from long-term care costs. This isn't just any ordinary trust—it's specifically designed to help preserve what you've built while potentially making you eligible for Medicaid benefits when you need them most.
🧾 What makes a trust a 'Medicaid trust'?
The answer lies in how it's structured to work around Medicaid's financial eligibility requirements. Once you place assets into this trust, they're no longer legally yours—they belong to the trust. When Medicaid looks at what you own to determine if you qualify for benefits, these trust assets don't count against you.
For our Forest Hills clients worried about nursing home costs, this makes all the difference. Here's what a properly set up MAPT can do:
• Preserve assets for your beneficiaries • Keep your home and investments protected
• Potentially qualify for Medicaid despite having substantial assets
The trust works because of two key requirements. First, the beneficiary must be someone other than you—usually your children or other family members. Second, while you might be able to receive income from the trust assets, you can't touch the principal.
🏛️ Why is it irrevocable and what does that mean?
Our Park Slope and Bay Ridge clients often wonder about this aspect. Simply put, once you establish an irrevocable trust, you can't change it or take it back. This might sound scary, but it's exactly what makes the trust work for Medicaid purposes. If you could still control the assets, Medicaid would say they're still yours.
The irrevocable nature creates a clear legal line. You're essentially telling Medicaid that these assets don't belong to you anymore. This separation brings several important benefits:
• Asset protection from nursing home costs • Preservation of your legacy for your beneficiaries
• Better tax treatment compared to simply giving assets away
We won't sugar-coat it—giving up direct control over your assets is one of the biggest considerations you'll face. Our Brooklyn clients sometimes struggle with this decision, but we help them understand how the protection often makes this trade-off worthwhile.
👨👩👧 Who typically sets up a MAPT in NY?
Throughout Queens neighborhoods like Astoria and Forest Hills, we primarily work with three types of families:
Healthy individuals planning ahead: People who are currently healthy but don't have enough income or resources to cover potential future long-term care costs.
Families protecting generational wealth: Those who want to make sure their assets go to their children and grandchildren while still being able to get necessary medical care.
Homeowners safeguarding their primary residence: Brooklyn residents who want to protect their most valuable asset from healthcare costs.
The best time to set up your MAPT is well before you need long-term care. New York has a five-year "look-back" period for nursing home care, so the earlier you plan, the better your protection. For Williamsburg and Carroll Gardens homeowners, this planning ahead can mean keeping your family home versus losing it to care costs.
We're here to help you figure out if a MAPT makes sense for your situation, weighing both the benefits and drawbacks based on what matters most to your family.
What are the top benefits of a Medicaid Asset Protection Trust in 2025?
After working hard your whole life, you shouldn't have to worry about nursing home costs eating away everything you've built for your family. For our clients across Flatbush, Jackson Heights, and other New York neighborhoods, rising long-term care expenses create real anxiety about the future. We're here to show you how a Medicaid Asset Protection Trust can offer remarkable protection for your financial legacy.
Protecting your home and savings from nursing home costs.
The numbers tell a sobering story—at age 65, you have nearly a 70% chance of needing long-term care. Here in the NYC metro area, nursing home costs average about $469 per day, which adds up to roughly $171,276 every year. That's enough to wipe out most families' savings pretty quickly.
When you transfer your assets into a properly structured MAPT, those assets no longer count toward your Medicaid eligibility. Even better, they stay protected from Medicaid's estate recovery program after you're gone. This means you can keep your Williamsburg brownstone or Forest Hills home in the family while still getting the medical care you need.
Avoiding probate and making things easier for your loved ones.
Nobody wants their family dealing with probate court while they're grieving. When your assets are held in a MAPT, they skip probate entirely. For your loved ones in Kew Gardens or Bensonhurst, this means:
• A faster transfer of your estate • Lower costs and fees
• More privacy for your family • Less chance of family conflicts over asset distribution
We've seen firsthand how avoiding probate can spare families months of stress and uncertainty during an already difficult time.
Shielding assets from creditors and family problems.
Life happens, and sometimes our children face unexpected challenges. Assets in your MAPT stay protected from your beneficiaries' creditors. Should your Bay Ridge daughter go through a divorce or your Astoria son run into financial troubles, their spouses or creditors can't touch the trust assets. Your hard-earned wealth stays exactly where you intended it—with the people you love.
Keeping valuable tax benefits for your family.
A properly structured MAPT preserves the full capital gains tax exclusion on your primary residence—that's $250,000 per spouse or $500,000 for married couples. When your beneficiaries eventually sell your Crown Heights home, they'll benefit from what's called a stepped-up basis, meaning the property gets valued at the market price when you passed away rather than what you originally paid. This can save your heirs significant money in capital gains taxes.
Staying in control of your family's future.
Even though the trust is irrevocable, you still get to decide who receives what remains in the trust when you're gone. You can specify how your beneficiaries should use their inheritance—whether for education, buying a home in Park Slope, or starting a business in Sunnyside. You can even keep what's called a "limited power of appointment," which lets you change beneficiaries if your family situation changes.
We promise to be there for you, offering our best advice and support through this process. Our goal is helping you safeguard what matters most while ensuring you can get the care you need when the time comes.
What are the disadvantages of a Medicaid trust you should know?
We're not going to sugarcoat this for you. While a Medicaid asset protection trust can be a powerful tool for Sheepshead Bay and Middle Village families, it's not right for everyone, and there are some real drawbacks you need to understand before making this decision.
Loss of control over assets. Once you put your assets into the trust, they're no longer yours to control. This isn't like a revocable trust where you can change your mind later—with an irrevocable MAPT, the trustee manages everything, and you can't sell, spend, or change these assets. For our Flushing and Sunset Park clients, this feels uncomfortable at first. What if you need money for an emergency? What if you want to help your grandchild with college? These are valid concerns.
The 5-year Medicaid look-back period. This is probably the biggest hurdle for Ridgewood families. New York has a strict 5-year look-back period for nursing home Medicaid. Transfer assets to your trust within those five years, and you'll face a penalty period where you can't get Medicaid. Here's how it works: transfer $100,000 and the monthly nursing home cost is $10,000? You're looking at a 10-month penalty period. That's why we always tell families to plan ahead.
Income from the trust may still affect eligibility. Even though your trust assets don't count toward Medicaid's resource limits, any income they generate might still cause problems. If your Glendale home is in the trust and you're collecting rent, or if your investments are throwing off dividends, that income could push you over Medicaid's thresholds. And if the trust pays you directly instead of paying your care facility, your SSI benefits might get reduced.
Not all assets work for MAPTs. Your IRA or 401(k)? They don't belong in a Medicaid trust. Moving retirement accounts into a trust usually means paying taxes immediately. Since you can't transfer qualified plans directly to trusts, you'd have to cash them out first—and that could create a huge tax bill. We help our Forest Hills and Park Slope clients figure out which assets make sense and which don't.
Legal and setup costs. Creating a proper MAPT isn't cheap. You're looking at anywhere from $2,000 to $12,000 in legal fees, which makes them impractical if your assets are under $100,000. Some New York firms charge a flat $3,000 for a Medicaid trust. Yes, that sounds like a lot, but when nursing home costs in NYC average over $171,000 a year, those upfront fees start to look reasonable.
After nearly 30 years of helping families across Brooklyn and Queens, we've learned that being honest about these disadvantages actually helps you make better decisions. We want you to go into this with your eyes wide open, understanding exactly what you're getting into.
How does a MAPT compare to other asset protection options in NY?
We know that choosing the right protection for your assets can feel overwhelming, especially with so many options available to Windsor Terrace and Jamaica Estates families. After nearly 30 years of helping clients make these important decisions, we want to show you how a Medicaid Asset Protection Trust stacks up against other alternatives you might be considering.
Life Estate Deed vs. MAPT
Many Kensington and Hollis homeowners ask us about life estate deeds because they seem simpler and cost less upfront than establishing a trust. We understand the appeal, but here's what we've learned from helping countless families:
When you have a life estate deed and decide to sell your Corona or Clinton Hill home while you're still alive, a substantial portion of those proceeds must go toward paying for your care. Even more concerning, if you rent out your property, all the net rental income becomes payable toward your nursing home expenses.
With a properly structured MAPT, your Bushwick or Fresh Meadows home can be sold without any obligation to use that principal for your care—as long as you've passed the look-back period. That's a significant difference that can save your family thousands.
Direct Gifts to Children vs. MAPT
For our Rego Park and Carroll Gardens clients considering just giving assets directly to their children, we've seen too many situations where this approach backfires. Your well-intentioned gifts become vulnerable to your children's potential creditors, divorce proceedings, and financial troubles. We've watched families lose everything they worked for because of circumstances completely beyond their control.
Here's another concern: Medicaid considers jointly held assets fully available for the ill parent's care, unless the child can prove their actual contribution. A MAPT protects you from these vulnerabilities.
Long-Term Care Insurance vs. MAPT
Long-term care insurance remains the gold standard for asset protection, and we always encourage our Forest Hills and Sunset Park clients to explore this option first. It's especially valuable because it helps you age in place by covering home care costs. Most of our Williamsburg and Maspeth clients tell us they'd much rather stay home than move to a facility.
But we also understand that not everyone can qualify for or afford long-term care insurance premiums. When that's your situation, a MAPT offers the next best protection strategy. We help you evaluate which option makes the most sense for your health situation and budget.
Contact us today to schedule a free consultation where we can discuss which protection strategy works best for your unique circumstances.
What legal and tax rules apply to MAPTs in New York?
We're here to help Brooklyn Heights and Forest Hills families understand the important legal and tax rules that affect your Medicaid asset protection trust. These regulations can seem complicated, but knowing how they work helps you get the most protection for your assets.
Understanding the look-back and penalty periods
For Bayside and Williamsburg homeowners, the 5-year lookback period is something you need to plan around carefully. Here's how it works: Medicaid looks at every asset transfer you made during the 60 months before you apply for benefits. If they find transfers during this time, they calculate a penalty by dividing what you transferred by the average monthly nursing home cost. Let's say you transferred $100,000 and the monthly nursing home cost in your area is $14,012—you'd face a 7.1-month penalty period where you can't get Medicaid.
That's why we always tell our clients to start planning early. The sooner you set up your trust, the better protected you'll be.
Grantor trust status and tax implications
Here's something that works in your favor: your MAPT stays a "grantor trust" for tax purposes even though it's irrevocable for Medicaid qualification. What this means for Park Slope and Astoria families is simple—you report the trust income on your personal tax return using your social security number, and you don't need a separate trust tax return.
We help you understand this benefit: Medicaid treats the assets as belonging to the trust (which protects them), but the IRS still treats them as yours for taxes. It's the best of both worlds.
Role of the trustee and limited power of appointment
Your trustee has an important job—they must manage the trust assets according to the terms you set up. Remember, the trustee cannot give trust principal back to you. But here's what you can keep: a limited power of appointment, which lets you change who gets the trust assets when you're gone without affecting your Medicaid eligibility.
Step-up in basis and capital gains tax planning
When you pass away, your trust assets get a valuable "step-up" in basis, meaning your heirs inherit them at current market value instead of what you originally paid. This can eliminate capital gains tax on any appreciation that happened while you owned them. Plus, your primary residence keeps its capital gains exclusion of $250,000 per spouse when it's sold.
With nearly 30 years of experience helping New York families, we make sure your trust is set up correctly to take advantage of these tax benefits while providing the asset protection you need.
Why a Medicaid Asset Protection Trust may be the right choice for you
Protecting what you've worked hard for while planning for future care doesn't have to feel overwhelming. We understand that every family situation is different, and what works for one family might not be right for another. That's exactly why we take the time to listen to your specific concerns and help you figure out the best path forward.
Timing really is everything when it comes to Medicaid asset protection trusts. The families who plan ahead—at least five years before they might need care—give themselves the strongest protection possible. We've seen how much peace of mind this early planning brings to our clients, knowing their homes and savings will be there for their loved ones.
We know that giving up control of your assets can feel scary at first. Many of our clients have had those same concerns. But once they understand how a MAPT works and see the benefits—protection from nursing home costs, avoiding probate, keeping assets safe from creditors—they realize it's often the smartest choice they can make for their families.
Your situation is unique, and that's how we'll treat it. What matters to your neighbor might not be what's most important to you. Whether you're concerned about protecting your home, making sure your children inherit your assets, or just want to know you'll be taken care of without losing everything, we're here to help you find the right solution.
Contact us today to schedule a free consultation where we can discuss your specific situation. We promise to be there for you, offering our best advice and support, so you can have peace of mind knowing everything is in good hands. After working hard your whole life, you deserve to know your family will be protected no matter what the future brings.
Key Takeaways
Understanding Medicaid Asset Protection Trusts can help New York families preserve their wealth while preparing for potential long-term care needs. Here are the essential insights every homeowner should know:
• Plan early to maximize protection: Establish your MAPT at least 5 years before needing care to avoid Medicaid's look-back penalty period and fully protect your assets.
• Preserve your home while qualifying for benefits: A properly structured MAPT shields your residence and savings from nursing home costs while maintaining capital gains tax exclusions.
• Accept permanent loss of control: Once assets enter an irrevocable MAPT, you cannot directly access or modify them, though trustees manage them according to your wishes.
• Compare all protection options carefully: MAPTs often outperform life estate deeds and direct gifts by providing comprehensive protection from creditors, divorces, and probate costs.
• Understand the tax advantages: Your trust maintains grantor status for taxes while assets receive step-up basis at death, potentially eliminating capital gains for heirs.
The key to successful Medicaid planning lies in balancing asset protection with your family's specific needs and timeline. Professional guidance becomes essential given New York's complex regulations and the irreversible nature of these important financial decisions.
FAQs
Q1. What is a Medicaid Asset Protection Trust (MAPT) and how does it work in New York?
A Medicaid Asset Protection Trust is a legal tool that helps protect your assets from long-term care costs while potentially qualifying you for Medicaid benefits. In New York, it's an irrevocable trust where assets are no longer considered yours for Medicaid eligibility purposes, but you may still receive income from the trust.
Q2. What are the main advantages of setting up a MAPT?
The key benefits include protecting your home and savings from nursing home costs, avoiding probate, shielding assets from creditors and lawsuits, preserving capital gains tax exclusions on your primary residence, and maintaining control over how and when your heirs receive assets.
Q3. What are the potential drawbacks of establishing a MAPT?
The main disadvantages include loss of direct control over assets placed in the trust, the 5-year Medicaid look-back period, potential impact of trust income on eligibility, unsuitability for certain assets like IRAs, and the legal and setup costs involved.
Q4. How does a MAPT compare to other asset protection strategies?
Compared to alternatives like life estate deeds or outright gifts to children, MAPTs often provide more comprehensive protection against multiple threats including nursing home costs, creditors, divorces, and probate expenses. However, long-term care insurance remains the gold standard for those who can qualify and afford it.
Q5. What are the key legal and tax considerations for MAPTs in New York?
Important factors include understanding the 5-year look-back period, maintaining grantor trust status for tax purposes, the role of the trustee and limited power of appointment, and benefits like step-up in basis for capital gains tax planning. It's crucial to work with experienced professionals to navigate these complex rules effectively.
