If you’re a homeowner, your home is likely one of your most valuable assets. Unfortunately, long-term care expenses and Medicaid estate recovery can interfere with your plans to keep and pass your home to your beneficiaries. Asset preservation estate planning (APEP) offers a structured way to protect your family home while preparing for potential care needs.
What Is Washington Asset Preservation Estate Planning (APEP)?
APEP is a legal approach that helps you qualify for long-term care assistance through Medicaid while protecting your home from estate recovery by the state after your death. Washington’s Medicaid program is administered by the Department of Social and Health Services (DSHS). The program includes a provision that allows the state to recover the cost of care from a Medicaid recipient’s estate. If your home passes through probate after your death, it becomes part of your estate and is subject to recovery.
When you apply for Medicaid long-term care services, your primary residence is usually considered a non-countable resource, as long as your spouse still lives there or you intend to return. However, this protection doesn’t last forever. After you pass away, the state can file a claim against your estate to recover the amount it paid for your care.
If your home passes through probate, it can be sold to satisfy this claim. Without a plan, your family may lose the home you intended to leave them. APEP planning focuses on keeping your home out of the probate estate while still complying with Medicaid eligibility rules.
How an APEP Trust Works
APEP uses a specialized irrevocable trust to hold the title to your home. This kind of trust removes the home from your countable assets for Medicaid purposes after the five-year look-back period. Here’s how it works:
- You create an irrevocable trust that complies with Washington Medicaid requirements.
- You transfer the title of your home into the trust.
- You name someone else (typically a trusted family member) as trustee.
- You retain a lifetime right to live in the home, but no longer own it.
- After your death, the home passes to your chosen beneficiaries without going through probate.
Because the trust is irrevocable and you are not the trustee, the home is no longer considered part of your estate for Medicaid recovery purposes. However, the transfer must be made more than five years before you apply for services.
Advantages of Using an APEP Trust
This type of planning provides several benefits, especially when done early:
- Protects your home from Medicaid estate recovery
- Avoids probate, which simplifies the legal process for your heirs
- Allows you to remain in your home for the rest of your life
- Preserves your eligibility for Medicaid if structured properly
- Prevents creditors or legal disputes from affecting the home
Transferring your home directly to your children without a trust may seem easier, but it comes with significant risks. For example, if your child goes through a divorce, bankruptcy, or lawsuit, the home could be vulnerable.
Who Should Consider APEP?
You may benefit from APEP if you:
- Own your home and want it to stay in the family
- Are concerned about long-term care costs
- Want to avoid probate and simplify inheritance
- Have time to plan and don’t expect to need Medicaid coverage in the near future
- Want to protect your home without giving it away outright
Even if you’re healthy now, it’s worth considering how Medicaid planning could fit into your overall estate strategy. Creating the right structure now can save your loved ones from future financial and legal stress.
Ask a Washington Estate Planning Attorney About Whether APEP Is Right for You
ELG Estate Planning helps Washingtonians navigate APEP and other long-term care planning options. If you want to protect your home and leave assets for your family, we’re here to help you take the next step. Contact us today to get started.