Picture this: you spend 30 years paying off your Brooklyn home, building savings, and quietly setting money aside for your kids. Then a health crisis hits, Medicaid steps in to cover your nursing home care, and — after you pass — the state sends a bill to your estate for every dollar it spent. Your heirs get what's left over, if anything at all.
This isn't a scare tactic. It's how New York's Medicaid Estate Recovery Program (MERP) actually works. And it's exactly why so many families ask: could a trust protect my assets and make sure they go directly to my heirs without Medicaid getting in the way?
The short answer is yes — but only the right kind of trust, set up at the right time.
Why Medicaid can reach into your estate after you're gone
Medicaid is a lifeline for long-term care costs, but it comes with strings attached. New York's MERP requires the state to seek reimbursement from the estates of Medicaid recipients who were 55 or older when they received benefits. Nursing home care in New York now runs an average of over $159,000 per year, according to the New York State Department of Financial Services — which means a two- or three-year stay can eat through a lifetime of savings before your heirs ever see a penny.
Medicaid's reach is limited to assets that pass through your probate estate — things owned solely in your name at death. That's the key detail, because it points directly to the solution.
A revocable living trust won't protect you
Many people assume any trust does the job. It doesn't. A revocable living trust — the kind commonly used to avoid probate — keeps you in full control of your assets. You can change it, dissolve it, and use the money inside it however you like. That flexibility is useful for estate administration, but Medicaid sees right through it. Because you retain control, Medicaid still counts those assets as yours. A revocable trust offers no protection from Medicaid eligibility requirements or estate recovery.
The tool built for this: a Medicaid Asset Protection Trust
A Medicaid Asset Protection Trust (MAPT) is a specific type of irrevocable trust designed to remove assets from your countable estate for Medicaid purposes. Once you transfer your home, savings, or investments into a MAPT, you no longer legally own those assets — the trust does. Medicaid can't count them toward your eligibility limit, and because they don't pass through your probate estate, the state has no claim on them after your death.
After you pass, the assets in the trust go directly to the beneficiaries you named — your children, grandchildren, or whomever you choose — without Medicaid interference.
There are real trade-offs to know about:
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You give up control. You can't dissolve the trust or take the assets back. You can typically retain the right to live in a home placed in the trust and receive income it generates, but you can't access the principal.
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You can't be your own trustee. A trusted family member or advisor serves in that role.
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Retirement accounts generally shouldn't go in. Transferring IRAs or 401(k)s into a MAPT can trigger immediate and significant tax consequences.
These aren't reasons to avoid a MAPT — they're reasons to plan carefully with someone who knows the rules.
The five-year look-back period: why timing is everything
Medicaid doesn't let people transfer assets into a trust the week before applying for benefits. Any transfer made within 60 months (five years) of a Medicaid application triggers a penalty period — a window during which you must pay for care entirely out of pocket before Medicaid kicks in.
The five-year clock starts the moment an asset is transferred into the trust, not when the trust is created. That's why elder law attorneys consistently say: the best time to set up a MAPT is years before you think you'll need it, while you're still in good health and have time on your side.
If you wait until a diagnosis arrives or a hospital stay forces the issue, your options narrow significantly. A rushed or improperly structured trust can create the very financial crisis it was meant to prevent.
What a MAPT can typically protect
Most MAPTs are funded with:
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Your primary residence
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Savings and checking accounts
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Certificates of deposit
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Investment accounts (non-retirement)
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Vacation or rental property
Real estate is by far the most common asset families want to protect. For many Brooklyn families, the home is the single largest asset they own — and the one most at risk of being claimed through estate recovery.
Getting the structure right matters
A MAPT is a powerful tool when it's drafted correctly, but the details matter enormously. Mistakes in the trustee structure, how income rights are handled, or what assets are transferred — and when — can result in penalties, tax problems, or a trust that doesn't do what you think it does.
At Alatsas Law Firm, attorney Ted Alatsas has spent nearly 30 years helping Brooklyn, Queens, and Staten Island families structure Medicaid plans that actually work. The goal is always the same: help you qualify for the benefits you need while making sure the assets you've worked for end up with the people you love.
If you're thinking about estate planning for your family's long-term security, a conversation about a MAPT is often where that plan starts. The sooner you act, the more options you have — and the better protected your family will be when it matters most.
