Medicaid trust

John, age 80 is a widower living alone in his home. His income is $2,400 per month from social security, a $1,200 per month pension and interest income from $200,000 in savings. John’s brother was in a nursing home for 6 years at a cost of $100,000 per year and John would like to avoid that situation. His main asset is his $400,000 home. If he takes no action and goes into the nursing home for 6 years like his brother, he could face the following. The nursing home would get his $3,600 per month SS and pension. The remainder of the $6,400 ($10,000 per month average cost of nursing home) to cover his expenses would come first from his savings and then from the house. In 31 months his $200,000 saving would be use up and the house would be sold. Over the next 29 months, assuming he dies after 6 years in the home, he will use up $185,000 from the sale of his house and his heirs will receive $215,000. John decides to purchase a Medicaid Asset Protection Trust (MAPT) to keep his assets safe from nursing care cost. He puts the home in the trust along with his $200,000 savings and after a five-year waiting period these assets are exempt from Medicaid. During that five-year period, he can continue to receive the interest from the $200,000. He is the trustor, sometimes called the grantor, and his two children are the trustees and the beneficiaries. He cannot benefit from the trust as he is no longer the owner of the assets but he can change the trustees and beneficiaries if he desires. He goes into full care and the nursing home receives his SS and pension but his assets are protected. The house can be rented out or sold and the proceeds remain in the trust until John dies at which time the assets pass to his heirs (children) as stated in the trust and most common is in equal shares to my children. Using a qualified eldercare attorney, the cost of such a trust is about $8,000.