How to Fund a Medicaid Asset Protection Trust in New York

A Medicaid Asset Protection Trust, often called a MAPT, is an irrevocable trust designed to hold a person’s assets so that those assets are not counted when he or she later applies for Medicaid to cover long-term care. Signing the trust agreement is only the first step. If a trust is never properly funded, it does not hold any assets, and property left in the grantor’s own name remains countable. In my practice, the funding stage is where much of the careful work takes place, and it deserves the same attention as the drafting itself.

What the Trust Is Built to Do

In a typical New York MAPT, the person creating the trust, known as the grantor, names a trusted family member, often an adult child, as trustee. The grantor may keep the right to receive income the trust produces and the right to live in a residence the trust owns, but gives up any right to the principal. Giving up access to principal is what allows Medicaid to treat the assets as no longer belonging to the grantor. I discussed the broader difference between revocable and irrevocable trusts in an earlier article in this series, and that distinction is the foundation for the funding steps described below.

Timing and the Lookback Period

Transfers into a MAPT are treated as gifts for Medicaid purposes. For nursing home coverage, New York reviews transfers made during the 60 months before the application, and a transfer inside that window can result in a penalty period. In 2020 the Legislature also approved a 30-month lookback for home care and other community-based services, but as of 2026 that rule still has not taken effect. Families can review the governing language in New York Social Services Law Section 366. Because the start date for the community lookback remains uncertain, I advise clients to fund the trust as early as practical rather than relying on the current absence of a lookback for home care.

Transferring a House or Condominium

Real estate is funded by preparing and signing a new deed conveying the property from the grantor to the trustee of the trust. In New York City, the deed is recorded with the Office of the City Register along with the required transfer tax forms; outside the city, it is recorded with the county clerk. I generally draft the trust so the grantor retains the right to occupy the home and a limited power to change who ultimately receives it. Those retained rights keep the property in the grantor’s taxable estate, which preserves the step-up in income tax basis for the children who later inherit it. They also help protect existing property tax exemptions, such as STAR or the senior citizen exemption, which should be confirmed with the local assessor after the deed is recorded. The homeowner’s insurance policy should be updated to name the trust, and any mortgage lender should be notified of the transfer.

Transferring a Cooperative Apartment

A co-op is handled differently from a house. The grantor owns shares in a corporation and holds a proprietary lease, so funding requires an assignment of the shares and the lease to the trustee. Most co-op boards require approval before the transfer, and ask for a copy of the trust, a new application, and sometimes a guarantee. I recommend contacting the managing agent early, since board review can take several weeks. We have helped hundreds of clients transfer their co-ops into their trusts, each co-op has a different procedure and its own fees.

Bank and Brokerage Accounts

Cash and investments are moved by opening new accounts titled in the name of the trustee of the trust and transferring the funds into them. Because a MAPT is usually structured as a grantor trust for income tax purposes, the account may report under the grantor’s Social Security number, although some institutions require a separate tax identification number. Interest and dividends can be paid to the grantor, but principal should stay in the trust. A trustee who writes checks from principal to the grantor, or who pays the grantor’s bills from trust principal, risks undoing the protection the trust was created to provide.

Assets That Usually Stay Out

Retirement accounts such as IRAs and 401(k)s generally should not be placed in a MAPT, because withdrawing the balance to fund the trust triggers income tax on the full amount. New York treats retirement accounts in payout status as exempt for Medicaid purposes, so they are often better left in place with carefully reviewed beneficiary designations. I also recommend leaving some cash outside the trust. In 2026, a single Medicaid applicant in New York may keep $33,038 in countable resources, and that amount can cover everyday expenses so the grantor does not need to ask the trustee for principal.

If your loved one has a home or asset which needs to be protected through a Medicaid Asset Protection Trust, contact us today at (347) 766-2685 for a free phone consultation.

Contributed by Roman Aminov, Esq, a Queens estate attorney in New York City.