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Medicaid Asset Protection Trusts: Technical Overview and Tax Considerations

State Specific Eligibility, Transferring Assets, Basis Step-Up at Death

Note: CLE credit is not offered on this program

A live 110-minute CPE webinar with interactive Q&A

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Friday, April 25, 2025 (in 10 days)

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

or call 1-800-926-7926
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This webinar will explain the tax treatment of Medicaid Asset Protection Trusts (MAPTs) and how they are used to protect taxpayers' wealth. Our panel of trust and estate specialists will review common state guidelines for Medicaid eligibility, discuss the grantor trust reporting and taxation rules, and offer suggestions to meet the state-specific asset and income thresholds.

Description

Long-term care costs continue to increase dramatically. Taxpayers want to plan to cover these substantial costs without consuming income streams and assets they have worked lifelong to acquire. A MAPT can provide relief for eligible individuals. States have varying income and asset thresholds that individuals must fall below to qualify for Medicaid coverage. In New York, for example, applicants must have less than $31,175 in assets, while the Georgia and Colorado threshold is only $2,000. To complicate matters, Medicaid has a five-year lookback period for asset transfers.

Although MAPTs are irrevocable trusts, specific powers listed in IRC Sections 671-679 can be included in the MAPT so that the trust is taxed as a grantor trust. The grantor could be given a reversionary interest or have the power to substitute assets, for example. Since the highest tax bracket, 37 percent, begins at $15,751 for taxable income of a trust but starts at $626,351 for individuals (2025), being taxed as a grantor can be critical. Trust and estate advisers need to grasp the tax treatment of MAPTs to properly advise clients and report the income from these beneficial trusts.

Listen as our panel of elder law experts discusses how taxpayers can utilize MAPTs to minimize taxes and preserve clients' assets.

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Outline

  1. Medicaid Asset Protection Trusts: introduction
  2. Irrevocable trusts
  3. Grantor trust taxation
  4. Selecting a trustee
  5. Transferring assets to a MAPT
    1. Lookback rules
    2. Potential tax consequences
  6. State-specific asset and income limits
  7. Planning for income and asset limitations
  8. Gift taxes
  9. Qualifying for basis step-up
  10. Examples

Benefits

The panel will review these and other critical issues:

  • Grantor trust reporting requirements
  • State-specific income and asset eligibility requirements
  • The look-back period for asset transfers
  • Planning alternatives to qualify for Medicaid long-term care benefits

Faculty

Hamilton, Paul
Paul W. Hamilton
Attorney
Hamilton Trust, Estate & Elder Law

Mr. Hamilton is an Attorney at Hamilton Trust, Estate & Elder Law. He is licensed to practice in...  |  Read More

Menninger, Michael
Michael J. Menninger
Owner/Attorney
Houck Menninger Law

Mr. Menninger focuses his practice on estate planning, including asset protection, working with farmers and...  |  Read More

Weyers, Howard
Howard (Jack) Weyers, Jr.
Attorney
Elder and Family Law of Mid-Michigan

Mr. Weyers is a graduate of Okemos High School, Spring Arbor University, and Western Michigan Thomas M. Cooley Law...  |  Read More

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