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When families start thinking about long-term care, especially nursing home care, one of the biggest fears is losing their home or life savings to the extremely high cost. A Medi-Cal Asset Protection Trust (MAPT), also known as a Medi-Cal Asset Preservation Trust, is one of the time-tested tools that can help protect assets while still allowing someone to eventually qualify for Medi-Cal’s long-term care benefits.

This can feel complicated, so here is a clear, easy breakdown along with a flow chart.

What Is a MAPT?

A MAPT is a special kind of irrevocable trust that allows you to move certain assets out of your name so they will not be counted when you apply for Medi-Cal. People most commonly put their home or other valuable assets into the trust.

A MAPT can also be used in advanced planning strategies involving gifting, any real estate, promissory notes, and annuities, but for most families, its main purpose is simple: Protect assets from long-term care costs while preserving Medi-Cal eligibility.

Who Controls the Trust?

While the person creating the trust (the “grantor”) gives up direct control over the assets, they are structured so that the grantor can retain certain critical powers:

• Keep the right to live in the home, as well as all other properties transferred to the trust
• Choose and change who manages the trust (the trustee), thus maintaining indirect control over the assets
• Choose and change who inherits the trust assets later

The trust will be treated as a “grantor trust” for tax purposes, which generally keeps things tax-friendly for the family.

Common Questions, Answered Simply

1. If my home is in a MAPT, can I still get the capital gains tax exclusion when I sell it?

Yes, and this lets you keep the homeowner tax benefits you’re used to.

2. If the trust receives income, who pays the taxes?

The grantor reports all the income on their personal tax return, even if someone else actually receives the money, so no additional tax returns are required.

3. Will Medi-Cal count that income against me?

No. You may report the income to the IRS for IRS purposes, but Medi-Cal does not count the income the trust generates.

4. If my home has a mortgage, can the bank call the loan if I transfer it to a MAPT?

No, as long as you keep the right to live in the home. Federal law protects homeowners in this situation.

5. Why would I want assets in the trust to be included in my estate when I die?

This gives your heirs a step-up in basis, which often eliminates capital gains tax when they sell inherited property. This is usually a very good thing.

6. If beneficiaries receive the trust income and later owe taxes, can the trust help them pay it?

Yes, if the trust is drafted to allow discretionary distributions, the trustee may use principal to help with tax obligations.

7. Will I owe capital gains tax when I transfer property into the MAPT?

No. Gains only occur when property is sold.

8. Who pays the expenses on a home inside the trust?

If you keep the right to live in the property, you can continue to pay the normal expenses. The trustee may pay those expenses on your behalf.

9. If it’s a joint trust for a married couple, do all the assets get a step-up in basis when one spouse dies?

Yes.

The Bottom Line

A Medi-Cal Asset Protection Trust is a powerful planning tool, but it must be drafted carefully to meet Medi-Cal rules, income tax rules, estate tax considerations, and real-world family goals.

If you or a loved one is considering long-term care planning or asset protection, it’s important to work with a qualified Elder Law attorney who can tailor the trust to your situation.

Click or tap for: MAPT Flowchart

Thanks for reading.
Christopher E. Botti, Esq., Certified Specialist in Estate Planning, Trust and Probate Law.

This blog is for informational purposes only and does not constitute legal advice. Every situation is unique, and you should consult with a qualified attorney for advice regarding your specific circumstances.