An irrevocable trust is one of the most reliable tools New Yorkers use to protect a home and savings from the cost of long-term care, but it only works if you fund it early enough to clear the Medicaid 5-year look-back. In plain terms: assets you transfer into a properly drafted irrevocable Medicaid trust are no longer counted as yours for institutional (nursing home) Medicaid eligibility, but New York “looks back” five years from your application date and penalizes uncompensated transfers made inside that window. Plan five years ahead and the assets are protected; wait too long and a transfer can trigger a penalty period of ineligibility. This guide gives you a practical, checklist-style path through the decision, governed by New York’s Estates, Powers and Trusts Law (EPTL) Article 7.
Why an Irrevocable Trust (and Not a Revocable One)
New York recognizes two broad families of living trusts, and the difference is decisive for Medicaid.
A revocable living trust keeps you in full control: you can amend or revoke it at any time. Its strengths are real — it avoids probate, keeps your affairs private, and provides for incapacity management. But because you retain control, the assets remain available to you, which means they are still countable for Medicaid and still part of your taxable estate.
An irrevocable trust generally cannot be amended or revoked. By giving up that control, you remove the assets from your countable resources for Medicaid purposes (after the look-back runs) and can also reduce estate-tax exposure and shield assets from certain creditors. The trade-off is permanence — which is exactly why drafting and timing matter so much.
| Feature | Revocable Living Trust | Irrevocable Medicaid Trust |
|---|---|---|
| Can you amend or revoke it? | Yes, anytime | No (with narrow exceptions) |
| Avoids probate | Yes | Yes |
| Protects assets from Medicaid | No | Yes, after the 5-year look-back |
| Reduces NY estate tax | No | Often yes |
| Governing law | EPTL Article 7 | EPTL Article 7 |
For a fuller comparison, see our Trusts Overview, Revocable Living Trust, and Irrevocable Trust pages.
How the 5-Year Look-Back Actually Works in NY
When you apply for institutional Medicaid in New York, the agency reviews your financial records for the 60 months (five years) before the application date. Uncompensated transfers — gifts, or assets moved into an irrevocable trust for less than fair value — made during that window can create a penalty period during which Medicaid will not pay for nursing home care. The penalty length is calculated by dividing the transferred amount by a regional rate, so larger transfers create longer penalties.
Two points New Yorkers often miss:
- The clock starts on transfer, not on application. A transfer made today begins its own five-year countdown today. Transfer assets into the trust now, and in five years they are fully protected.
- The look-back currently applies to nursing-home (institutional) Medicaid. New York’s planned look-back for community-based (home care) Medicaid has been repeatedly delayed. Rules change, so confirm the current status before you act.
This is why the single most valuable thing you can do is start early. The trust does not undo the past; it protects the future.
Practical Checklist: Your Next Steps
Use this sequence to move from “thinking about it” to “protected.”
- Inventory your assets. List the home, bank and brokerage accounts, and any non-retirement assets. (Retirement accounts and the primary residence are treated specially — flag them for review.)
- Identify your five-year horizon. Be honest about your health and family history. The earlier you fund the trust, the more it protects.
- Choose what goes in. The home and appreciated investments are common candidates. Keep enough liquid assets outside the trust for everyday needs — you cannot freely access trust principal once it is irrevocable.
- Pick the right trust type. A Medicaid Asset Protection Trust (a form of irrevocable trust) is typical. If a beneficiary is disabled, a Supplemental/Special Needs Trust under EPTL 7-1.12 may be needed to preserve their own benefits.
- Select a trustee — not yourself. You generally cannot be trustee of your own Medicaid trust. Choose a trusted adult child or other reliable fiduciary.
- Draft with reserved rights where allowed. A well-drafted trust can let you keep the right to live in your home and receive trust income, while removing principal from your countable resources.
- Fund the trust properly. Deed the home, retitle accounts — an unfunded trust protects nothing.
- Document everything and calendar the five-year mark. Keep clean records; the application will require them.
- Coordinate the trustee’s duties. Your trustee owes the prudent-investor standard (EPTL Article 11-A), a duty of loyalty, and a duty to account to beneficiaries.
- Review every few years. Laws, asset values, and family circumstances change.
See our Trust Administration and Special Needs Trust pages for how these trusts are managed after funding.
Trust vs. Will — Why a Will Won’t Help Here
A will does nothing for Medicaid planning. A will controls who inherits after you die, and it must be filed and probated in the Surrogate’s Court — a public process. A trust, by contrast, avoids probate, stays private, and (when irrevocable) protects assets during your lifetime. For long-term-care planning, the irrevocable trust is the workhorse; the will is the backstop. Compare them on our Trust vs. Will page.
Don’t Forget Estate Tax
For larger estates, the irrevocable trust does double duty. New York’s estate tax for 2026 has a basic exclusion amount of $7,350,000. New York also has a notorious “cliff”: an estate exceeding 105% of the exclusion ($7,717,500) loses the entire exemption, not just the excess. Because assets in a properly structured irrevocable trust are removed from your taxable estate, this planning can keep an estate under the cliff. (A revocable trust does not — those assets stay in your taxable estate.)
Frequently Asked Questions
Can I change my mind after creating an irrevocable trust?
Generally no — that is the point of “irrevocable.” Some flexibility can be built in during drafting (such as the right to change beneficiaries through a power of appointment), but you cannot simply pull the assets back out. Plan carefully before signing.
Will the trust protect my home from a nursing home?
If the home is properly transferred into a Medicaid irrevocable trust and the five-year look-back has passed, yes — it is no longer a countable resource. A revocable trust will not accomplish this.
What if I need nursing home care before five years pass?
A transfer inside the look-back can create a penalty period, but it does not erase the planning entirely. Strategies exist to soften the impact, and any protection of remaining assets is still worthwhile. This is a situation to bring to a lawyer immediately.
Do I lose access to the money in the trust?
You lose access to the principal. A well-drafted trust can still let you receive the income and, in the case of your residence, retain the right to live there. That is why drafting matters.
Talk to a New York Trusts Attorney
The look-back rewards people who plan ahead and punishes those who wait. If you are in New York and want to protect your home and savings from long-term-care costs the right way, the time to act is now — before the five-year clock matters. Russel Morgan, Esq., and the team at Morgan Legal Group draft and fund irrevocable trusts statewide across New York.
Schedule your consultation with Russel Morgan, Esq.
Further reading from Morgan Legal Group: how an irrevocable trust works.