Medicaid Irrevocable Trust

A Medicaid irrevocable trust (often called a Medicaid Asset Protection Trust, or MAPT) is a

legal vehicle used to protect assets from being counted for Medicaid eligibility, especially for

long-term care, while preserving them for heirs.

Core idea:

You transfer assets (like a home or investments) into an irrevocable trust, meaning you give up

direct ownership and control. Because those assets are no longer legally yours, Medicaid may not

count them after certain rules are met.

How it works

• You (the grantor) place assets into the trust

• A trustee (not you) manages them

• You can often still receive income generated by the assets (e.g., interest, dividends)

• The principal (the assets themselves) is protected and typically passes to beneficiaries

• (like children)

  
  

The 5-year lookback rule

This is critical: Medicaid reviews any asset transfers made within the 5 years before applying.

• If you transfer assets into the trust and apply within 5 years → you may face a penalty

  period (temporary ineligibility)

• If you wait more than 5 years → the assets are generally not counted

  
  

What it’s commonly used for

• Protecting a home from being spent down on nursing home care

• Preserving savings for children or heirs

• Planning ahead for long-term care costs

  
  

Trade-offs and limitations

• Loss of control: You can’t freely take assets back out

• Irrevocable: Changes are difficult or impossible

• Timing-sensitive: Works best when done well in advance of needing care

• Income may still count: Income you receive can affect eligibility

  
  

Quick example

A 70-year-old transfers their home and $300,000 into a Medicaid irrevocable trust. Five years

later, they need nursing home care. Because the assets are no longer in their name (and outside

the lookback period), Medicaid can cover care costs—while the home and savings are preserved

for their children.