Creating a NY Medicaid Asset Protection Trust (MAPT) with Appreciated Assets

When considering the assets to be placed in a New York Medicaid Asset Protection Trust (MAPT), it is important to evaluate whether these assets have appreciated in value. If the assets have a low basis and have appreciated significantly, drafting the trust so the assets are included in the gross estate for federal estate tax purposes can be beneficial. This inclusion allows for a step-up in basis under IRC 1014, which can reduce the capital gains tax liability for the beneficiaries when the assets are eventually sold. Therefore, careful planning is essential to ensure that appreciated assets are managed in a way that maximizes tax benefits while still protecting them from being counted as resources for Medicaid eligibility.