Asset Protection Trust

An Asset Protection Trust (APT) is an irrevocable trust designed to shield assets from future creditors, lawsuits, and judgments by legally separating ownership from the person who contributed the assets. It is one of the strongest tools in advanced estate planning for lawsuit‑prone individuals, high‑net‑worth families, and anyone seeking to insulate wealth from future claims.

An Asset Protection Trust (APT) is a special type of irrevocable trust that:

  • Holds assets beyond the reach of most creditors
  • Requires the settlor (creator) to give up legal ownership and control
  • Uses an independent trustee with discretionary distribution power
  • Includes a spendthrift clause preventing beneficiaries from assigning or pledging trust assets
  • Protects against future, not existing, creditor claims

It is NOT a magic shield, you have to do it right!

A trust is self‑settled if the grantor retains any beneficial interest, including:

  • Right to receive distributions
  • Right to receive income
  • Right to receive principal
  • Right to live in trust property (QPRT exception aside, but QPRT is not an APT)
  • Right to discretionary distributions

Even purely discretionary interests count — if the trustee may distribute to the grantor, it’s self‑settled.

Self-settled Trust = 10-year federal lookback period.

Non self-settled trust = 2-year federal lookback period = 4-year federal lookback period.

If assets transferred during lookback period, then asset can be reached by creditor even in the irrevocable trust.

Medicaid Asset Protection Trust (MAPT)

A MAPT is an irrevocable trust used to remove assets from Medicaid “countable resources” so a person can qualify for Medicaid long‑term care while preserving assets for heirs, provided it is created and funded before the Medicaid look‑back period.

General Rule: 5‑Year Look‑Back
Most states impose a 60‑month (5‑year) look‑back period.


California Exception
California is re‑implementing a 30‑month look‑back for long‑term care Medicaid (Medi‑Cal) beginning January 1, 2026.

The look‑back period is measured backward from the date the applicant applies for Medicaid long‑term care benefits (nursing home or in‑home care).

To qualify for LTC Medicaid, you must have low countable assets, but:

  • Your home is exempt
  • Your car is exempt
  • Your personal property is exempt
  • Your retirement accounts (401k, IRA) are often exempt if you take RMDs
  • A MAPT can protect non‑exempt assets

Medicaid LTC can recover against these exempted assets that go through probate.