MEDICAID ASSET PROTECTION TRUST AGREEMENT

[// GUIDANCE: A Medicaid Asset Protection Trust (MAPT) is an irrevocable trust designed to protect assets from Medicaid spend-down requirements while preserving eligibility for long-term care benefits. The 60-month lookback period is critical - assets transferred to this trust will be subject to penalty if the Grantor applies for Medicaid within 5 years of the transfer. California currently has a 30-month lookback but is expected to extend it.]

Effective Date: [DATE]

Grantor/Settlor: [FULL LEGAL NAME]
Address: [ADDRESS]
Social Security Number: [XXX-XX-XXXX]
Date of Birth: [DATE]

Trustee: [FULL LEGAL NAME]
Address: [ADDRESS]

Trust Name: "[GRANTOR NAME] Medicaid Asset Protection Trust"

State of Administration: [STATE]

RECITALS

WHEREAS, the Grantor desires to create an irrevocable trust for the benefit of the Grantor and the Grantor's descendants;

WHEREAS, the Grantor wishes to protect assets from the costs of long-term care while preserving potential eligibility for means-tested government benefits, including Medicaid;

WHEREAS, the Grantor understands that transfers to this Trust are subject to the Medicaid lookback period of sixty (60) months (or such other period as may apply under applicable state law);

WHEREAS, the Grantor intends this Trust to be irrevocable and to relinquish all incidents of ownership over the Trust principal;

NOW, THEREFORE, the Grantor hereby declares and establishes this Medicaid Asset Protection Trust as follows:

ARTICLE 1: CREATION OF TRUST

1.1 Trust Established

The Grantor hereby irrevocably transfers, assigns, and delivers to the Trustee the property described in Schedule A attached hereto (the "Initial Trust Property"), to be held, managed, and distributed in accordance with the terms of this Agreement.

1.2 Irrevocability

This Trust is irrevocable. The Grantor expressly relinquishes all power and authority to alter, amend, revoke, or terminate this Trust or any of its provisions. The Grantor shall have no right to direct investments, demand distributions of principal, or otherwise exercise control over the Trust assets.

[// GUIDANCE: The irrevocability is essential for Medicaid planning. Any retained control over principal could cause the Trust assets to be counted as available resources.]

1.3 Trust Name

This Trust shall be known as the "[GRANTOR NAME] Medicaid Asset Protection Trust" or such other name as the Trustee may designate for administrative purposes.

1.4 Additional Contributions

The Grantor or any other person may, with the Trustee's consent, irrevocably transfer additional property to this Trust. All such property shall become part of the Trust Estate and shall be administered pursuant to the terms hereof.

ARTICLE 2: DEFINITIONS

"Applicable Law" means the laws of the State of [STATE], including its Probate Code, Trust Code, and Medicaid regulations, as well as applicable federal law.

"Beneficiary" means any person entitled to receive distributions from this Trust, including income beneficiaries and remainder beneficiaries.

"Code" means the Internal Revenue Code of 1986, as amended.

"Community Spouse" means the spouse of a Medicaid applicant who is not applying for or receiving Medicaid long-term care benefits.

"Grantor" means [GRANTOR NAME], also referred to as the Settlor.

"Lookback Period" means the sixty (60) month period (or such other period as applicable state law provides) immediately preceding a Medicaid application during which asset transfers are reviewed for eligibility purposes.

"Medicaid" means the joint federal-state program providing medical assistance under Title XIX of the Social Security Act, as implemented by applicable state law, including any successor programs.

"Primary Residence" means real property that served as the Grantor's principal place of residence.

"Trust Estate" means all property held in this Trust, including the Initial Trust Property, any additional contributions, and all income, appreciation, and proceeds thereof.

"Trustee" means the individual or entity serving as trustee, including any successor trustee.

ARTICLE 3: TRUSTEE PROVISIONS

3.1 Initial Trustee

The initial Trustee shall be [TRUSTEE NAME].

[// GUIDANCE: The Grantor and the Grantor's spouse CANNOT serve as Trustee. Choose a trusted family member, friend, or professional fiduciary. Adult children are commonly named as Trustees.]

3.2 Trustee Restrictions

The following persons may NOT serve as Trustee:
(a) The Grantor;
(b) The Grantor's spouse;
(c) Any person or entity that would cause Trust assets to be considered available to the Grantor for Medicaid eligibility purposes under applicable law.

3.3 Successor Trustees

If the initial Trustee is unable or unwilling to serve, the following shall serve as successor Trustee, in order of priority:

First Successor: [NAME]
Second Successor: [NAME]
Third Successor: [NAME]

If no named successor is able or willing to serve, the remaining adult beneficiaries shall appoint a successor Trustee by majority vote.

3.4 Resignation

Any Trustee may resign by giving thirty (30) days' written notice to the adult beneficiaries and any designated Trust Protector.

3.5 Removal

The Trust Protector, if any, or a majority of the adult, competent beneficiaries, may remove any Trustee for cause by written notice. Cause includes breach of fiduciary duty, incapacity, or failure to perform Trustee duties.

3.6 Acceptance

A successor Trustee shall accept appointment by signing a written acceptance, whereupon all rights, powers, and duties shall transfer to such successor without further action.

3.7 Compensation

The Trustee shall be entitled to reasonable compensation for services rendered, consistent with the compensation customarily charged by professional fiduciaries in the State of [STATE]. If the Trustee is a family member, the Trustee may waive compensation or receive reasonable compensation as determined appropriate.

3.8 Bond

No Trustee shall be required to furnish bond or other security.

ARTICLE 4: INCOME DISTRIBUTIONS

4.1 Mandatory Income Distribution

The Trustee SHALL distribute all net income of the Trust to the Grantor at least annually, or more frequently at the Trustee's discretion.

[// GUIDANCE: This income-only provision is critical for Medicaid planning. The Grantor retains the right to income but NOT principal, which keeps the principal outside the Grantor's available resources for Medicaid purposes.]

4.2 Definition of Income

For purposes of this Article, "income" means income as determined under state trust accounting law and the Uniform Principal and Income Act, including interest, dividends, rents, and other receipts normally classified as income.

4.3 Income Tax Reporting

The Grantor shall be responsible for reporting and paying all income taxes on Trust income. The Trust shall be treated as a "grantor trust" for income tax purposes under Code Sections 671-679 with respect to income distributions to the Grantor.

ARTICLE 5: PRINCIPAL DISTRIBUTIONS

5.1 Discretionary Distributions to Beneficiaries Other Than Grantor

The Trustee may, in the Trustee's sole and absolute discretion, distribute principal to or for the benefit of any one or more of the following beneficiaries (the "Discretionary Beneficiaries"):

[// GUIDANCE: List beneficiaries. Typically, the Grantor's children and descendants. The Grantor must NOT be a beneficiary of principal.]

(a) [CHILD NAME 1]
(b) [CHILD NAME 2]
(c) [OTHER BENEFICIARY]

5.2 Standard for Discretionary Distributions

In making discretionary principal distributions, the Trustee may consider the health, education, maintenance, and support needs of the Discretionary Beneficiaries, their other resources, and any other factors the Trustee deems relevant.

5.3 No Distributions to Grantor

UNDER NO CIRCUMSTANCES shall any principal be distributed to or for the benefit of the Grantor. This prohibition is absolute and may not be waived, modified, or circumvented by the Trustee, any beneficiary, or any court.

5.4 No Distributions to Grantor's Spouse

The Grantor's spouse shall not receive any distributions of principal from this Trust. This prohibition is included to protect Medicaid eligibility.

[// GUIDANCE: Some states permit limited spousal access; verify with local counsel.]

5.5 No Distributions for Grantor's Benefit

No distribution shall be made that would directly or indirectly benefit the Grantor or be used to pay the Grantor's legal obligations, including but not limited to:
(a) The Grantor's debts or liabilities;
(b) The Grantor's long-term care costs;
(c) Any obligation the Grantor has to third parties.

ARTICLE 6: RESIDENCE PROVISIONS

[// GUIDANCE: If transferring the primary residence to the MAPT, these provisions allow the Grantor to continue living there.]

6.1 Right to Occupy

If the Trust holds real property that was the Grantor's primary residence, the Grantor shall have the right to occupy and use such property as the Grantor's residence for the remainder of the Grantor's lifetime, without payment of rent.

6.2 Expenses

The Trustee may, but is not required to, pay from Trust income or principal the following expenses related to the residence:
(a) Real property taxes;
(b) Homeowner's insurance premiums;
(c) Maintenance and repairs;
(d) Utilities (at Trustee's discretion).

The Grantor may also pay such expenses directly without such payments being considered contributions to the Trust.

6.3 Sale of Residence

If the Trustee determines that the sale of the residence is in the best interests of the Trust and beneficiaries (including after the Grantor has permanently vacated the property), the Trustee may sell the residence. The net proceeds shall become part of the Trust principal.

6.4 No Lease Required

The Grantor's occupancy shall not require a written lease or rental agreement, and the Grantor's right to occupy shall be deemed a retained use right, not a life estate.

[// GUIDANCE: Some practitioners prefer a retained life estate (Lady Bird deed) for real property; others use the trust approach. Consult local counsel on the preferred method in your state.]

ARTICLE 7: TRUST PROTECTOR (OPTIONAL)

7.1 Appointment of Trust Protector

[SELECT ONE]
☐ The Grantor hereby appoints [NAME] as Trust Protector.
☐ No Trust Protector is appointed at this time.

7.2 Powers of Trust Protector

If appointed, the Trust Protector shall have the following powers, exercisable in a nonfiduciary capacity:
(a) To remove and replace the Trustee;
(b) To modify the administrative provisions of this Trust to comply with changes in tax or Medicaid law;
(c) To add or remove beneficiaries (other than the Grantor or Grantor's spouse);
(d) To change the situs of the Trust;
(e) To convert this Trust to a total return unitrust if permitted by law.

7.3 Limitations

The Trust Protector may NOT:
(a) Make any modification that would cause Trust principal to be available to or for the benefit of the Grantor;
(b) Make any modification that would violate the rule against perpetuities;
(c) Serve as Trustee.

7.4 Successor Trust Protector

If the Trust Protector is unable or unwilling to serve, [NAME] shall serve as successor Trust Protector.

ARTICLE 8: TERMINATION AND DISTRIBUTION

8.1 Termination Upon Grantor's Death

Upon the Grantor's death, the Trust shall terminate (unless continued pursuant to Section 8.3), and the Trustee shall distribute the remaining Trust Estate as follows:

[// GUIDANCE: Customize the remainder distribution. Common provisions include equal distribution among children, or per stirpes distribution to descendants.]

(a) To [BENEFICIARY 1]: [SHARE/PERCENTAGE]
(b) To [BENEFICIARY 2]: [SHARE/PERCENTAGE]
(c) To [BENEFICIARY 3]: [SHARE/PERCENTAGE]

8.2 Deceased Beneficiary

If any beneficiary does not survive the Grantor, such beneficiary's share shall be distributed:
☐ To such beneficiary's then-living descendants, per stirpes; or
☐ To the remaining beneficiaries, in equal shares.

8.3 Optional Continuing Trust

[SELECT ONE]
☐ The Trust shall terminate and distribute outright upon the Grantor's death.
☐ The Trustee may, in the Trustee's discretion, continue holding any share for a beneficiary who is under age [AGE] or who the Trustee determines would benefit from continued Trust protection.

8.4 Medicaid Estate Recovery

The Grantor acknowledges that, depending on state law, the Trust may or may not be subject to Medicaid estate recovery claims following the Grantor's death. The Grantor has consulted with legal counsel regarding the estate recovery laws of [STATE].

[// GUIDANCE: Estate recovery laws vary significantly by state. Some states can only recover from the probate estate; others have expanded recovery. Verify current law.]

ARTICLE 9: ADMINISTRATIVE PROVISIONS

9.1 Trustee Powers

The Trustee shall have all powers granted under the [STATE] Trust Code and/or Uniform Trust Code, including but not limited to the power to:
(a) Invest and reinvest Trust assets prudently;
(b) Sell, lease, exchange, or otherwise dispose of Trust property;
(c) Borrow money and encumber Trust assets;
(d) Employ agents, attorneys, accountants, and other professionals;
(e) Make distributions in cash or in kind;
(f) Establish reserves for taxes, expenses, and contingencies;
(g) Exercise all rights incident to ownership of securities;
(h) Make tax elections as the Trustee deems advisable.

9.2 Prudent Investor Rule

The Trustee shall invest and manage Trust assets as a prudent investor would, considering the purposes, terms, distribution requirements, and other circumstances of the Trust.

9.3 Accountings

The Trustee shall provide an annual accounting to each adult beneficiary, setting forth all receipts, disbursements, and assets on hand.

9.4 Records

The Trustee shall maintain accurate records of all Trust transactions and shall make such records available for inspection by beneficiaries upon reasonable request.

9.5 Tax Returns

The Trustee shall prepare and file all required tax returns. For income tax purposes, this Trust is intended to be treated as a grantor trust with respect to the Grantor during the Grantor's lifetime.

9.6 Tax Identification Number

The Trust shall obtain its own Employer Identification Number (EIN). However, if the Trust is treated as a grantor trust, the Grantor's Social Security Number may be used for income tax reporting.

ARTICLE 10: SPENDTHRIFT PROVISIONS

10.1 Spendthrift Clause

No beneficiary shall have the power to assign, transfer, pledge, or encumber any interest in this Trust, whether income or principal, before actual distribution. No interest of any beneficiary shall be subject to the claims of creditors, including claims for alimony, child support, or division of property in divorce, except to the extent required by law.

10.2 Exception for Self-Settled Trust

The Grantor acknowledges that these spendthrift protections do NOT apply to protect the Grantor from the Grantor's own creditors, as this is a self-settled trust. The purpose of these provisions is to protect the interests of the remainder beneficiaries.

ARTICLE 11: GRANTOR TRUST STATUS

11.1 Intent

It is the Grantor's intent that this Trust be treated as a "grantor trust" for federal income tax purposes under Code Sections 671-679, with the Grantor being treated as the owner of Trust assets for income tax purposes.

11.2 Grantor Trust Powers

To ensure grantor trust status, the Trustee (other than the Grantor's spouse) shall have the following power, exercisable in a nonfiduciary capacity without the consent of any person in a fiduciary capacity:
The power to reacquire Trust assets by substituting other assets of equivalent value.

[// GUIDANCE: This substitution power maintains grantor trust status for income taxes while not giving the Grantor control over principal for Medicaid purposes.]

11.3 Income Tax Payment

The Grantor's payment of income taxes attributable to Trust income shall not be considered a gift to the Trust or its beneficiaries.

ARTICLE 12: MEDICAID COMPLIANCE PROVISIONS

12.1 Intent

The Grantor's intent is that Trust principal shall not be considered an available resource for Medicaid eligibility purposes. All provisions of this Trust shall be construed consistently with this intent.

12.2 Lookback Acknowledgment

The Grantor acknowledges and understands that:
(a) Transfers to this Trust are subject to the Medicaid lookback period of sixty (60) months (or such other period as state law may provide);
(b) If the Grantor applies for Medicaid long-term care benefits within the lookback period, a transfer penalty may be imposed;
(c) The penalty period does not begin until the Grantor is otherwise eligible for Medicaid;
(d) The Grantor has received advice from legal counsel regarding these consequences.

12.3 No Amendment to Create Availability

No provision of this Trust may be amended, and no power may be exercised, in any manner that would cause Trust principal to be considered available to the Grantor for Medicaid eligibility purposes.

12.4 Interpretation

If any provision of this Trust is found to cause Trust assets to be considered available to the Grantor for Medicaid eligibility purposes, such provision shall be void and severed from this Trust, and the remaining provisions shall continue in effect.

ARTICLE 13: GENERAL PROVISIONS

13.1 Governing Law

This Trust shall be governed by and construed in accordance with the laws of the State of [STATE], without regard to conflicts of law principles.

13.2 Situs

The situs of this Trust shall be [STATE]. The Trustee may change the situs to another state if the Trustee determines it is in the best interests of the Trust and beneficiaries.

13.3 Severability

If any provision of this Trust is held invalid, illegal, or unenforceable, the remaining provisions shall continue in full force and effect.

13.4 Headings

Article and section headings are for convenience only and shall not affect interpretation.

13.5 Binding Effect

This Trust shall be binding upon the Grantor, the Trustee, and all beneficiaries, and their respective heirs, personal representatives, successors, and assigns.

13.6 Gender and Number

Words of any gender shall include all genders, and words in the singular shall include the plural, and vice versa, as the context requires.

13.7 Rule Against Perpetuities

Unless sooner terminated, this Trust shall terminate twenty-one (21) years after the death of the last to survive of the Grantor and the beneficiaries named herein who are living on the date of this Trust, and the Trust Estate shall be distributed to the then-living beneficiaries.

13.8 No Contest Clause

If any beneficiary contests this Trust or any of its provisions in any court, such beneficiary's interest shall be reduced to the minimum amount required by law.

EXECUTION

IN WITNESS WHEREOF, the Grantor and the Trustee have executed this Medicaid Asset Protection Trust Agreement as of the date first written above.

GRANTOR:

_________________________________
[GRANTOR NAME]

Date: _____________

TRUSTEE:

_________________________________
[TRUSTEE NAME], as Trustee

Date: _____________

NOTARY ACKNOWLEDGMENT - GRANTOR

STATE OF [STATE]
COUNTY OF [COUNTY]

On this ___ day of _____________, 20___, before me, the undersigned notary public, personally appeared [GRANTOR NAME], proved to me through satisfactory evidence of identification to be the person whose name is signed on the preceding document, and acknowledged to me that [he/she] signed it voluntarily for its stated purpose.

_________________________________
Notary Public
My Commission Expires: ____________

[NOTARY SEAL]

NOTARY ACKNOWLEDGMENT - TRUSTEE

STATE OF [STATE]
COUNTY OF [COUNTY]

On this ___ day of _____________, 20___, before me, the undersigned notary public, personally appeared [TRUSTEE NAME], proved to me through satisfactory evidence of identification to be the person whose name is signed on the preceding document, and acknowledged to me that [he/she] signed it voluntarily for its stated purpose as Trustee.

_________________________________
Notary Public
My Commission Expires: ____________

[NOTARY SEAL]

SCHEDULE A: INITIAL TRUST PROPERTY

The following property is hereby transferred to the Trustee to be held as part of the Trust Estate:

Real Property:
☐ [Legal description of real property, if any]

Bank Accounts:
☐ [Institution, account type, approximate value]

Investment Accounts:
☐ [Institution, account type, approximate value]

Other Assets:
☐ [Description and approximate value]

Total Approximate Value of Initial Trust Property: $_______________

SCHEDULE B: GRANTOR RETAINED POWERS

The Grantor retains the following powers with respect to the Trust:

1. Income: The right to receive all net income of the Trust during the Grantor's lifetime.

2. Residence: If real property is transferred to the Trust, the right to occupy such property as the Grantor's residence without payment of rent.

3. Substitution (for Tax Purposes): The Grantor retains the power, exercisable in a nonfiduciary capacity, to reacquire Trust assets by substituting assets of equivalent value, solely for the purpose of maintaining grantor trust status for income tax purposes.

[// GUIDANCE: These retained powers are carefully selected to maintain income tax benefits while NOT causing Trust principal to be available for Medicaid purposes.]

IMPORTANT NOTICE: This trust must be established at least 60 months (5 years) before applying for Medicaid long-term care benefits to avoid transfer penalties. Consult with a qualified elder law attorney regarding the specific requirements and implications in your state.