I’ve met with many clients over the years who love the asset protection and probate avoidance of a Medicaid Asset Protection Trust (MAPT), but who get very nervous when they see that the trust is irrevocable.  The good news is that you can get the best of both worlds with the MAPT, that is, get the benefits of an irrevocable trust and also have the flexibility of a traditional revocable living trust.  This article will go into each of these components and explain them in more detail.

First, the benefits of being irrevocable is that Medicaid cannot consider the trust funds as an available resource.  This means that Medicaid cannot require you to spend down the funds in an irrevocable trust if you need to go on government benefits, provided you meet the other eligibility criteria and any look-back periods.  The rationale is that, if the trust could be revoked by you, then you could just get the money out.  If you can access the trust in this way, Medicaid would have the right to as well.  So, it the end, it is a “must” for asset protection purposes, that the trust be “irrevocable.”

Turning to the second part of the equation, we add a great deal of flexibility into the trust to make what is considered an irrevocable trust very much like a revocable one.  For example, the trust language reserves in the grantor (that’s you) the right to change the beneficiaries.  You are allowed to change the trustees.  You can even revoke the trust as a whole utilizing a provision of the Estates, Powers and Trusts Law (EPTL 7-1.9).  These rights are usually considered only available in the revocable trust, but they can be implemented in a MAPT.

Most clients don’t end up needing to change or revoke their MAPT.  However, just knowing that the powers are available takes a lot of the concern out of creating an irrevocable trust and should allay any concerns.  The goal is to help clients sleep better at night, and that includes allaying any concerns about the perceived rigidity of what is a very useful and flexible estate planning and asset protection tool.