Creating a Medicaid Asset Protection Trust to Protect Your Future

Preparing for the inevitable takes proper planning and thoughtful consideration.  This is especially true when it comes to the protection of your assets.  This includes protection from creditors, scammers, and medical expenses, or nursing care expenses.  This article briefly explains and discusses what a Medicaid Asset Protection Trust (MAPT) is, why it is important, and how it can be used.  This type of trust is also called by other names such as a Medicaid Planning trust, Medicaid Trust, or Home Protection Trust.

*This blog is for educational purposes only and should not be considered legal advice. The use of the Paths Law Firm website does not constitute a client-lawyer relationship.

A trust is a legal entity holding title to assets.  It is a written document, like a contract, with provisions or rules on how the assets titled in the trust are to be managed and used.  Different types of trusts have different provisions and different purposes.  Usually, we assign titles to trusts describing the purpose for which they’re being used.

All trusts have three positions, one is the “grantor”.  This is usually an individual or a married couple.  The grantor creates, or starts, the trust and may also be referred to as the settlor or the trustmaker.  The second position, in no particular order, is the “trustee”.  This may be an individual, a committee of persons, or a professional trustee, usually a bank.  This position is the manager of the assets held in trust and the one responsible for following the directions regarding who is to benefit from the trust and administering it.  Finally, the third position is the “beneficiary”.  It is common for trusts to have multiple beneficiaries and this position may consist of persons, organizations, or have an overall purpose.  This is the person or entity receiving the income or the principal (assets) of the trust.

There are many different types of trusts however not all trusts are Medicaid Asset Protection Trusts. Usually, a title for a trust is assigned to describe the overall general purpose of using the trust.  This may include an irrevocable life insurance trust, a qualified spousal trust, or even the more common revocable living trust.  This title will usually tell an experienced estate planner a lot when reviewing a plan.

medicaid asset protection trust

What is a Medicaid Asset Protection Trust?

A Medicaid Asset Protection Trust, or often referred to as a MAPT for convenience, can be a valuable planning strategy to help applicants meet Medicaid’s income and asset limits.  It is a tool used in elder law and designed to help seniors ensure their assets go to the intended beneficiary or heirs vs. being lost to the cost of care in the future.  This type of trust helps protect an applicant’s assets which would otherwise be counted in determining eligibility.  This trust is used to shield assets from nursing home care costs; however, some rules restrict the protection of the trust.  

One rule with which many people are familiar is the “5-year look-back period.”  Essentially, if any asset is transferred, whether as a gift to an individual or to MAPT, a penalty period will be assessed against the applicant.  During this penalty period, the applicant is not eligible for Medicaid benefits.  The length of the penalty period is determined by the value of the asset(s) transferred within 5 years of applying for Medicaid.

It is easiest if the assets are transferred to the trust and the trust is in place for 5 years before applying for Medicaid in order to meet the 5-year look-back period rule. However, most don’t know, but the law actually requires the penalty period to be assessed for transfers made for the purpose of qualifying for Medicaid.  An experienced attorney should help you understand how intervening factors, pre-existing conditions, and other factors impact this additional provision. 

planning for medicaid nursing care

How Does a Medicaid Protection Trust Work?

To better understand a MAPT, it is important to note the person creating the trust, referred to as a grantor, settlor, or trustmaker, should not be the trustee of the trust.  The adult children, grandchildren, or other family members can be trustee(s).  The trustee must follow the rules set by the trust, which specify how trust income and principal can be used.  Also, there are beneficiaries assigned to the trust.  The beneficiaries are the individuals who benefit from the trust.  Beneficiaries’ designations are very flexible and they may benefit from the trust during the grantor’s life or after the applicant’s death. 

For the MAPT to be compliant with Medicaid and for the assets held in the trust not to be considered when qualifying for Medicaid, the grantor cannot be a beneficiary of the trust principal, that is the assets of the trust.  If the grantor is a beneficiary, he or she would have direct access to the assets making them available to pay for care based on Medicaid’s rules. An experienced planner can discuss the options available to lessen the fears a grantor may have regarding access to their assets.

The trust must be irrevocable to be exempt from Medicaid’s income and asset limits.  Irrevocable means the trust cannot be changed or canceled once it has been put in place.  Once income and assets have been transferred to an irrevocable trust, they are no longer considered to be controlled by or owned by the grantor.  The trust will specifically restrict transferring any assets to or back to the grantor.  This is why revocable trusts (often referred to as “living trusts”) are still in the control of the grantor and therefore counted towards the grantor’s income and asset limits set by Medicaid.

medicaid planning trust

What Are the Benefits of a Medicaid Trust?

If you are considering a Medicaid Asset Protection Trust, it is important to plan as far in advance as possible.  This is because it cannot be used immediately by an individual applying for Medicaid benefits.  Remember the 5-year look-back provision.  If an individual needs Medicaid quickly there are other laws and strategies an experienced elder law attorney can implement.  

Below are a  few of the benefits of a Medicaid Trust: 

  • Allows the applicant to place income and assets over the Medicaid limits in the trust to help meet Medicaid’s requirements without having to spend down assets.
  • The assets in the trust are protected for beneficiaries listed by the trustee making them protected from estate recovery.   

Shortcomings of a Medicaid Trust:

  • The trust must be set up 5 years before an individual applies for Medicaid. 
  • Income and Assets transferred into the trust are not directly or solely controlled or owned by the grantor.  The assets cannot be transferred back if the grantor becomes well enough to return home.

medicaid asset protection trusts

What Assets Can be Put in a Medicaid Planning Trust?

Assets are placed in a Medicaid Asset Protection Trust are not counted towards the asset limit if the plan is properly done.  This can help individuals applying for Medicaid to qualify, as long as the trust has been in place for a sufficient amount of time or the other factors addressed above are met. 

Essentially any type of asset can be transferred to the trust.  Some assets are highly suggested to be transferred to the trust, but a couple of types of assets are not eligible to be transferred directly.  A recommended asset eligible to be placed in a Medicaid Asset Protection Trust for planning is an individual’s home.  When a grantor transfers their home into a Medicaid Asset Protection Trust, he or she may continue to live in the home and even sell the home and purchase a new one. 

Other assets suggested to be transferred to this type of trust include other real estate, checking and savings accounts, and investments.  Good guidelines to consider when deciding which assets to transfer are 1) any assets not likely needed for a year or so, and 2) it is better to transfer more assets, rather than less.  Retirement accounts, such as a 401K, IRA, and most annuities really cannot be titled in any trust because of tax implications which are best discussed with your attorney or financial advisor.

Another important factor of which to be aware of relates to income-generating assets.  If assets generate income in the Medicaid Asset Protection Trust, the grantor can collect the income generated, and the principal can continue to be protected.  Before choosing the income to be paid to the grantor, it should be considered if the income generated pushes an applicant over any benefit income limit.  Generally, when an individual is in a nursing home, any income produced by the principal in a Medicaid trust goes towards nursing home costs.  An advanced estate planning attorney can discuss the use of “spigot powers” to regulate or later control the income payments.

protecting assets from cost of care

Working with a Medicaid Planning Attorney

It is vitally important a trust is set up correctly.  There is no exception when it comes to a Medicaid Asset Protection Trust, which can be extraordinarily complex.  Because Medicaid rules change frequently it is recommended to work with an experienced elder law attorney who has a lot of knowledge and experience working with MAPT laws and the intricacies of trusts in general.  If a MAPT is set up incorrectly it could cause an individual to be ineligible for benefits through Medicaid, which defeats the purpose of creating this type of trust.

At Paths Elder Law, we focus on working with seniors and their families to ensure a brighter future.  We are deeply versed in the laws of Medicaid and understand how important it is to prepare for the future with the appropriate planning strategies.  If you or a loved one needs assistance protecting your assets with a Medicaid Asset Protection Trust or other planning strategies to protect your future, contact us to schedule a consultation.   Our experienced and caring staff will work with you to create a custom plan based on your circumstances and needs. 

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Community Relations

Jeane M. Fracassa

Community Relations

Jeane M. Fracassa

Jeane Fracassa – a dedicated and accomplished professional who retired with an impressive 38-year service record from the Kansas City Missouri Police Department. Throughout her illustrious career, Jeane served as a Civian Supervisor in the Communications Unit, where she played a pivotal role in ensuring efficient and effective communication within the department.

Even in retirement, Jeane’s commitment to community service remains unwavering. Currently, she serves in various capacities within Community Relations at Paths Law Firm. Actively engaged in the Lee’s Summit and Overland Park communities, she proudly represents the law firm.

In all aspects of her life, Jeane Fracassa exemplifies the values of community, compassion, and family. Her commitment to making a difference and her love for exploration make her a remarkable individual, whose presence brightens the lives of those she encounters. Whether at work, with family, or during her travels, Jeane’s genuine care for others and her zest for life make her a truly remarkable and inspiring person.

Administrative Assistant

Laura E. Messer

Administrative Assistant

Laura E. Messer

Laura is the Law Firm’s marketing assistant, supporting all marketing tasks, including managing calendars, researching upcoming events, updating marketing software and spreadsheets, and partnering with organizations to maintain relationships that benefit Paths Law Firm’s clients.  Laura is also the law firm’s professional photographer as she provides the professional photographs for the headshots, organizations, events, and networking.

Laura has over 10 years of experience as a professional photographer.  She is also Adobe and Microsoft Certified.  She graduated from Columbia College, Columbia, Missouri with her Bachelor of Arts degree, Magna Cum Laude, in Behavioral Psychology (minors in Social Work and Criminal Justice), and her Photographic Craftsman degree from Professional Photographers of America. She is certified as a Qualified Mental Health Professional, Certified Gentle Teacher, Medicaid Billing Certified, Crisis Intervention Counselor, and a Missouri Notary.

Laura has been married more than 26 years and has a daughter and a son. She has four brothers, a niece, and a nephew. Her four spoiled pets that love her attention. A lot of Laura’s off time is spent taking photos and she is an internationally published photographer. Laura owns a studio on the historic Independence Square. 

Administrative Assistant

Holly D. Bramble

Administrative Assistant

Holly D. Bramble

Holly is our newest member of the administrative team. She is hardworking, has proven organizational skills and excellent communication skills. Holly has transitioned to the Estate Planning field from healthcare administration where she gained valuable knowledge that has contributed to her success here at Paths.

Holly enjoys spending time with loved ones, cheering for the Chiefs, and relaxing on the beach.

Administrative Assistant

Tressa L. Purdy

Administrative Assistant

Tressa L. Purdy

Tressa has the important role of being a client’s initial point of contact as the law firm’s receptionist for all locations.  She also welcomes, assists, and cares for clients at the Lee’s Summit office. Additionally, she provides support in an administrative capacity for the attorneys, staff, and clients.  When you meet Tressa, the first quality many note is her readiness to be of assistance.

 

Tressa is a graduate of Park Hill High School with extensive administrative experience and executive level management. Tressa brings a stability and comfort to the law firm experience having worked in a variety of industries and having lived in six different major metropolitan cities.

 

Tressa has a daughter, two sons, and one grandchild.  In her free time, she enjoys her family and friends, loves being outdoors, gardening, bike riding and bird watching. Indoor hobbies include scrapbooking, painting cookies, and cheering on Chiefs football. She is a Kansas City native but enjoys traveling but is always happy to be back in her hometown.  

Attorney

Kathleen E. Overton

Attorney

Kathleen E. Overton

Kathleen Overton is an attorney and owner at Paths Law Firm. She has more than 17 years of experience advocating for those with special needs and navigating the state and federal agencies formed to help the disabled and elderly. At Paths Law Firm, Kathleen’s practice focuses on helping the elderly qualify for nursing home Medicaid, creating estate plans to protect beneficiaries, as well as a lot of time planning and forming businesses. Kathleen also enjoys helping clients form non-profit organizations and obtain 501(c)(3) tax exempt status.

 

After attending law school at the University of Oklahoma, Kathleen began representing clients before the Social Security Administration. Eventually her practice switched to federal court appeals and Kathleen spent years representing clients before the Eastern and Western District of Missouri, the District of Kansas, and the Eighth Circuit Court of Appeals. Kathleen has since focused her practice on estate planning and elder law after watching clients struggle to find ways to financially care for loved ones with special needs or aging parents.

 

Kathleen lives in the Northland with her husband and four children. She spends her free time attending soccer matches and ballet performances with her children and starting endless home improvement projects with her husband. 

Medicaid paralegal

Tena K. Dooley

Medicaid Paralegal

Tena K. Dooley

Tena is a Medicaid Paralegal.  She is very meticulous and organized.  She works closely with the attorneys, clients, and State representatives. 

Tena has an associate in applied science and has over 20 years of office management experience. She has two daughters and one grandson.

Tena enjoys spending time with her family.  She enjoys everything outdoors and her hobbies include fishing and gardening.

PARALEGAL & ACCOUNTANT

Sydney R. Morris

PARALEGAL & ACCOUNTANT

Sydney R. Morris

Sydney is the law firm’s internal accountant and one of their experienced paralegals having been with Paths Law Firm since 2017. She is a primary point of contact for estate planning and business planning.

Sydney graduated with honors from the University of Missouri Kansas City in 2022 with her Bachelor of Science Degree in Accounting. She is a Bloch Launchpad, Phi Theta Kappa, and National Honor Society alumni.

In her free time, Sydney enjoys spending time with her husband, reading, baking and going on long walks. 

SENIOR ADMINISTRATIVE ASSISTANT

Christy L. Phillips

SENIOR ADMINISTRATIVE ASSISTANT

Christy L. Phillips

Christy has three years of experience in elder law working for seniors and their families. She is currently the Senior Administrative Assistant and organizes the day to day functions of the office and makes sure everything runs smoothly. When asked why she loved what she does, Christy said at Paths Law Firm, she gets the opportunity to help clients in more ways than one. Her favorite parts of the job are getting to know the clients and helping them get their questions answered. 

Christy’s experience in the finance industry has been extremely beneficial to her role as the Senior Administrative Assistant. Christy has a special place in her heart for the elderly and attributes this to the relationship she had with her grandparents. 

Christy was raised in Ogden, Utah and moved to Independence, MO, when she was ten years old. She has been with her high school sweetheart for 25 years and they have two beautiful children together. Her daughter works in the medical industry, and her son currently attends High School and plays Baseball. When Christy is not working, she enjoys crafting and spending time with her family and friends.

Christy’s experience in the finance industry has been extremely beneficial to her role as Benefits Coordinator. There have been many influences that went into her decision to select the field of Elder Law. Christy has a special place in her heart for the elderly and attributes this to her relationship with her grandparents.

When asked why she loves what she does, Christy said that at Paths Elder law, she gets the opportunity to help clients in more ways than one. Her favorite part of her job is getting clients approved for Medicaid or VA benefits as it is a huge relief for them and their loved ones.

Christy was raised in Ogden, Utah, and moved to Independence, MO, when she was ten years old. She has two children that keep her busy and fill her life with joy! Christy’s daughter cheers for Avila University, and her son plays competitive baseball for the Bucks and races BMX locally for the Motorcycle Closeout Team.

When Christy is not working, she enjoys crafting and making homemade gifts for her loved ones and raising her kids to be healthy, happy, and positive humans.

 

Practice Areas

  • Medicaid Benefits
  • VA Benefits

 

Professionalc Memberships and Affiliations

  • Missouri Notary

FINANCIAL MANAGER

René A. Fracassa

Rene A. Fracassa, Paths Law

FINANCIAL MANAGER

René A. Fracassa

René is the Financial Manager at Paths Law Firm overseeing all aspects of revenue, expenses, and financial planning. She is also responsible for general office management, including assisting in many of the administrative matters that periodically arise. 

 

René earned her Bachelor of Science in Hotel and Restaurant Management from Central Missouri State University in Warrensburg, Missouri and soon thereafter worked her way through management at The American Restaurant where she worked almost 17 years before relocating to the country of China.

 

René is the Financial Manager at Paths Law Firm overseeing all aspects of revenue, expenses, and financial planning. She is also responsible for general office management, including assisting in many of the administrative matters that periodically arise. 

 

René earned her Bachelor of Science in Hotel and Restaurant Management from Central Missouri State University in Warrensburg, Missouri and soon thereafter worked her way through management at The American Restaurant where she worked almost 17 years before relocating to the country of China.

 

René is the Financial Manager at Paths Law Firm overseeing all aspects of revenue, expenses, and financial planning. She is also responsible for general office management, including assisting in many of the administrative matters that periodically arise. 

 

René earned her Bachelor of Science in Hotel and Restaurant Management from Central Missouri State University in Warrensburg, Missouri and soon thereafter worked her way through management at The American Restaurant where she worked almost 17 years before relocating to the country of China.

 

René is the Financial Manager at Paths Law Firm overseeing all aspects of revenue, expenses, and financial planning. She is also responsible for general office management, including assisting in many of the administrative matters that periodically arise. 

 

René earned her Bachelor of Science in Hotel and Restaurant Management from Central Missouri State University in Warrensburg, Missouri and soon thereafter worked her way through management at The American Restaurant where she worked almost 17 years before relocating to the country of China.

 

In her spare time, René is currently quite active managing multiple generations of her family, including parents and grandkids.  René has had great impact on the lives of many women teaching discipling and teaching and abundance of Bible Studies. Her former career in management and event planning trained her well to juggle all the activity.

MARKETING MANAGER

Hilary R. Tichota

MARKETING MANAGER

Hilary R. Tichota

Hilary plays a vital role in managing the Marketing Department at Paths Law Firm.  She is excellent at bringing new ideas and sharing valuable resources with the law firm and our community. Hilary has been with the law firm since the beginning, working in nearly every role which is invaluable in her marketing endeavors as she brings a unique set of skills into the Marketing Department.

Hilary is nearly complete in her Bachelor’s of Arts Degree in Marketing at Park University.  She has earned the honor of being listed in National Honors Society, Phi Theta Kappa, and the Dean’s List. Hilary is always looking for new and innovative ways to share the law firm’s message.

While not working, Hilary spends her time with her family at their rural home. They tend to their chickens and honeybees and enjoy the solitude of country living.

SR. PARALEGAL & OPERATIONS MANAGER

Jennifer A. Bronson

SR. PARALEGAL & OPERATIONS MANAGER

Jennifer

Jennifer is the Sr. Paralegal and Operations Manager at Paths Law Firm.  She oversees the firm’s probate department as well developing, implementing, and managing all the firm’s administrative processes having been with the law firm almost from the beginning.  She enjoys client contact as well as behind-the-scenes operations.

 

Jennifer began her legal career in 1990 as a legal secretary.  She has worked in small and medium sized firms, as well as court operations.  She has her Paralegal Certificate from Boston University, Law Office Management Certificate from University of Central Missouri, and she is a Master Financial Coach. 

 

Jennifer has two daughters, twin sons, and twin grandsons.  She spends as much time as she can with them.  She enjoys reading, listening to podcasts, and tending her yard. 

ATTORNEY

Russell A. Fracassa (Rusty)

ATTORNEY

Russell A. Fracassa (Rusty)

When asked what he wants to do, his reply was “I just want to sit at the kitchen table and work directly with people.” Rusty enjoys working with clients providing experienced advocacy and supporting them through their unfamiliar and overwhelming situations. Due to all the challenges faced by seniors, it is essential to work with an experienced elder law attorney who has expertise in the law, issues, and concerns affecting seniors and their families.

Rusty brings more than 30 years legal experience and expertise working for seniors and their families as an elder law attorney in Kansas City and surrounding. Prior to law school, Rusty was an accountant and his first couple years practicing law was as a tax attorney. This provides invaluable experience in his current practice of law. Rusty’s focus is helping protect seniors’ assets from taxes and long-term care costs, benefit qualification, and navigating more complex family scenarios in their estate planning.

Rusty has personally experienced the loss every parent fears, caring for a spouse suffering with cancer and the treatment, and working with aging parents through all stages of their lives.  He intimately understands the challenges faced by individuals and their caretakers when capacity or health declines, how to prepare for it, and the legal matters while in the midst of it.  He may not be able to eliminate his client’s grief, but he strives to provide clients with peace of mind.

In 2010, Rusty’s faith and love led him and part of his family to China as Christian missionaries. He and his wife, went permanently, but ended up dedicating 3 years to that ministry. They returned to Missouri to help with grandchildren after a family tragedy and later began anew with Paths Elder Law. The goal is providing compassionate care through legal advocacy.

Rusty has multiple degrees and advanced study spanning his Bachelor’s of Arts in Business Administration – Accounting at Rockhurst College (now Rockhurst University), Masters of Arts in Accounting and in Intercultural Studies, as well as his Juris Doctorate from the University of Missouri at Kansas City School of Law.

When Rusty is not practicing law, he enjoys spending time with his family, grandchildren, and excessive eating at local restaurants.

Practice Areas

  • Wills and Trusts
  • Estate Planning
  • Asset Protection
  • Medicaid Benefits
  • VA Benefits
  • Probate
  • Guardianship and Conservatorships
  • Education

 

BSBA and Master’s in Accounting, Master’s in Inter-Cultural Studies, and Doctorate in Juris Prudence

  • Rockhurst University
  • Liberty University
  • University of Missouri – Kansas City


Admissions to Practice

  • Missouri


Professional Memberships and Affiliations

  • State Bar of Missouri
  • National Academy of Elder Law Attorneys (long-time Member)
  • Elder Counsel (Charter and Ongoing Member)
  • Missouri Association of Trial Attorneys (Past Member)
  • Kansas City Metropolitan Bar Association
  • Missouri State Bar Committees – Elder Law, Estate Planning, Probate