Preserve Your Wealth While Qualifying for Long-Term Care Benefits

Planning for long-term care is one of the most important financial steps we can take as we age. Nursing home and assisted living costs in Michigan can easily consume savings in just a few short years. Many families assume they must spend down nearly everything before qualifying for Medicaid, but this is not always the case. By using a Medicaid Asset Protection Trust (MAPT), it is possible to protect wealth for loved ones while still becoming eligible for Medicaid coverage. This requires careful planning, knowledge of Michigan law, and an understanding of how Medicaid reviews assets and transfers.

At Boroja, Bernier & Associates, we regularly guide families in Troy, Shelby Township, and throughout Michigan through these complicated decisions. A MAPT is not a simple document—it is a legal strategy that must be structured properly to comply with Medicaid rules and avoid costly mistakes. By addressing these issues early, families can preserve homes, retirement accounts, and other property rather than watching them disappear to nursing home bills.

What A Medicaid Asset Protection Trust Is

A Medicaid Asset Protection Trust is an irrevocable trust created to transfer ownership of certain assets out of an individual’s name so that those assets are not counted for Medicaid eligibility. Once transferred, the assets belong to the trust and are no longer considered available to pay for care.

Under Michigan law, Medicaid eligibility rules are governed by the Social Welfare Act, MCL 400.1 et seq., and regulations enforced by the Michigan Department of Health and Human Services (MDHHS). Medicaid will review an applicant’s assets and income, and if they exceed allowable limits, the application will be denied. A properly structured MAPT reduces those countable assets while preserving them for heirs.

The Five-Year Lookback Rule

One of the most important rules in Medicaid planning is the five-year lookback period. Under federal law incorporated into Michigan’s Medicaid system, all transfers of assets within five years of a Medicaid application are scrutinized. If the state determines assets were given away or transferred to a trust during that time, the applicant may face a penalty period of ineligibility.

For example, if a parent transfers their home to a MAPT just two years before applying for Medicaid, the state can impose a penalty period where the parent must pay for care out-of-pocket. This is why timing is critical, and why we encourage families to consider planning well before a crisis arises.

Protecting The Family Home

For many Michigan families, the home is their largest asset. Without planning, the state may place a lien on the home to recover Medicaid costs after the individual passes away. By transferring the home into a MAPT, ownership passes to the trust, shielding it from Medicaid recovery while still allowing the individual to live in it during their lifetime.

The Michigan Estates and Protected Individuals Code (EPIC), MCL 700.1101 et seq., governs how property is handled in probate. Without planning, the home could end up in probate or subject to estate recovery. A MAPT avoids this problem by ensuring the property is not part of the individual’s estate at death.

Benefits Of A Medicaid Asset Protection Trust

• Preserves Wealth For Heirs – Assets placed in the trust can ultimately pass to children or other beneficiaries.
• Protects Against Estate Recovery – The state cannot recover costs from assets in the trust.
• Provides Peace Of Mind – Families know that long-term care will not erase a lifetime of savings.
• Keeps Control Through The Trustee – While the creator gives up direct ownership, a chosen trustee manages the assets according to instructions in the trust.

Risks And Considerations

A MAPT is irrevocable, meaning once assets are placed into the trust, the individual cannot take them back. This loss of control can be uncomfortable, which is why choosing the right trustee is crucial. Additionally, if transfers are made too close to applying for Medicaid, the penalty rules will apply.

This planning must be handled carefully and in full compliance with Michigan Medicaid rules. Mistakes can cause delays, penalties, or outright denial of benefits. For that reason, we strongly recommend working with attorneys experienced in both elder law and Medicaid planning.

FAQs About Medicaid Asset Protection Trusts In Michigan

What Is The Difference Between A Revocable Trust And A Medicaid Asset Protection Trust?

A revocable living trust allows you to maintain control over your assets during your lifetime, but because you can revoke it, Medicaid still counts those assets. A Medicaid Asset Protection Trust is irrevocable, meaning you cannot take the assets back, and therefore, Medicaid does not consider them available for your care.

When Should Someone Create A Medicaid Asset Protection Trust?

Ideally, a MAPT should be created at least five years before there is any chance of needing nursing home care. Waiting until a crisis makes it much harder to avoid penalties because of the five-year lookback period.

Can Income Be Protected In A Medicaid Asset Protection Trust?

Generally, MAPTs are designed to protect assets, not income. However, income generated by the trust can be directed to beneficiaries or held in the trust, depending on how it is structured. Medicaid will still review your income to determine eligibility.

Will Transferring My Home To A Medicaid Asset Protection Trust Affect My Property Taxes?

In most cases, transferring a home into a properly drafted MAPT does not affect Michigan property tax exemptions, including the homestead exemption. However, it must be drafted carefully to preserve those benefits.

Can I Serve As Trustee Of My Own Medicaid Asset Protection Trust?

No, because that would give you too much control, and Medicaid would still count the assets. Typically, children or trusted relatives are named as trustees, although professional trustees may also be appointed.

What Happens If I Need Care Before The Five-Year Lookback Has Passed?

If you enter a nursing home before the five years are up, the transfer will trigger a penalty. In some cases, we can help families explore strategies to minimize the penalty, but this situation is much more difficult than planning early.

Does A Medicaid Asset Protection Trust Affect Eligibility For VA Benefits?

It can, since VA programs also review assets and transfers. If you are a veteran, it is critical to coordinate Medicaid and VA planning to avoid conflicts between the two systems.

Call Boroja, Bernier & Associates To Schedule A Consultation

At Boroja, Bernier & Associates, we understand how overwhelming it can feel to think about nursing home care and how it might impact your family’s financial security. Our attorneys help families in Oakland County, Macomb County, and throughout Michigan create Medicaid Asset Protection Trusts that protect what matters most.

If you are ready to explore how a MAPT can secure your assets and qualify you for long-term care benefits, call us today. Contact the Michigan estate plan attorneys at Boroja, Bernier & Associates PLLC, to receive a free consultation when you call 586-991-7611. We have offices in Troy and Shelby Township, serving clients throughout Oakland County and Macomb County, Michigan.