Irrevocable Trusts and the Medicaid 5-Year Look-Back in NY

An irrevocable trust is the central tool New York families use to protect a home and savings from long-term care costs — but it only works if it is funded well before you need care, because of the Medicaid five-year look-back. When you transfer assets into a properly drafted irrevocable trust, those assets generally stop counting as yours for Medicaid eligibility. The catch: New York’s Medicaid program reviews transfers made during the 60 months before you apply for institutional (nursing home) coverage. Transfers inside that window can trigger a penalty period of ineligibility. The practical takeaway is simple — the trust is powerful, the clock is unforgiving, and the best move is to plan early. This guide gives you a clear, checklist-style path to the next steps.

Why an Irrevocable Trust — and Not a Revocable One

In New York, trusts are governed by the Estates, Powers and Trusts Law (EPTL) Article 7. The choice between revocable and irrevocable is the single most important decision for Medicaid planning.

A revocable living trust lets the grantor keep full control and amend or revoke the trust at any time. Its benefits are real — it avoids probate, preserves privacy, and provides incapacity management. But because you still control the assets, they remain part of your estate and do not receive Medicaid or estate-tax protection. Learn more on our revocable living trust page.

An irrevocable trust generally cannot be amended once created. By surrendering that control, you remove the assets from your countable estate — which is exactly what enables estate-tax reduction, asset protection, and Medicaid planning. The trade-off is permanence, which is why the drafting must be precise. See our irrevocable trust page for details, and our trusts overview to compare every option.

Feature	Revocable Trust	Irrevocable Trust
Grantor can amend/revoke	Yes	No (generally)
Avoids probate	Yes	Yes
Medicaid asset protection	No	Yes (after look-back)
Estate-tax reduction	No	Yes
Subject to 5-year look-back	N/A	Yes

How the 5-Year Look-Back Actually Works

When you apply for nursing-home Medicaid in New York, the agency examines all asset transfers made in the 60 months (five years) before the application date. Gifts and below-market transfers — including funding an irrevocable trust — are scrutinized. If an uncompensated transfer falls inside the window, Medicaid imposes a penalty period: a span of time during which you are ineligible for institutional coverage, calculated from the value transferred.

A few practical points New Yorkers should understand:

• The look-back applies to institutional (nursing home) Medicaid. Community-based long-term care has historically been treated differently, but rules evolve — confirm current policy before you rely on a distinction.
• The penalty does not begin when you make the transfer. It begins when you would otherwise qualify for and need care, which is often when families are most financially exposed.
• This is precisely why funding an irrevocable trust five years and a day before you need care is the gold standard. Once the look-back window passes, the trust assets are protected.

The Practical Checklist: Your Next Steps

If you are considering an irrevocable trust for Medicaid planning in New York, work through these steps in order.

1. Inventory your assets. List your home, bank accounts, investments, and life insurance. Identify what you want to protect versus what you’ll keep accessible for living expenses.
2. Define your timeline honestly. Are you planning ahead while healthy, or reacting to a recent diagnosis? Your timeline drives strategy. Earlier is dramatically better.
3. Decide what stays out of the trust. You should keep enough liquid assets outside the trust to live comfortably, because irrevocable means you give up direct control of what goes in.
4. Choose your trustee carefully. This person manages the trust and owes you and the beneficiaries serious legal duties (more below). It is often an adult child or trusted relative.
5. Draft an income-only or asset-protection trust. Many New York Medicaid trusts let the grantor receive income while protecting principal. The exact structure must match your goals.
6. Fund the trust promptly. A trust on paper protects nothing. Re-title the deed to your home and move designated accounts so the five-year clock starts running.
7. Keep meticulous records. Document every transfer date and value. When you apply for Medicaid, you’ll need to prove the transfers fall outside the look-back.
8. Review periodically. Tax thresholds and Medicaid rules change. Revisit the plan with counsel every few years and after major life events.

For ongoing oversight once the trust is funded, see our trust administration page.

Trustee Duties You’re Relying On

Because an irrevocable trust takes assets out of your direct control, the trustee’s integrity is critical. Under New York law, a trustee owes:

• A duty of loyalty — acting solely in the interest of the beneficiaries.
• A prudent-investor standard under EPTL Article 11-A — investing trust assets with reasonable care, skill, and caution.
• A duty to account — keeping clear records and reporting to beneficiaries.

Trustees may be entitled to commissions under the schedules set out in the SCPA and EPTL; the specifics depend on the trust and the assets managed.

What About Special Needs and Estate Tax?

If a beneficiary has a disability, an irrevocable supplemental (special) needs trust under EPTL 7-1.12 can preserve means-tested benefits like Medicaid and SSI while still providing for that person. This is a distinct tool from a Medicaid asset-protection trust — see our special needs trust page.

On the estate-tax side, New York imposes its own tax separate from the federal system. For 2026, the basic exclusion amount is $7,350,000. New York’s tax also carries a “cliff” at 105% of the exclusion — $7,717,500. An estate that exceeds the cliff loses the entire exemption, not just the excess, making it taxable from the first dollar. Irrevocable trusts can help keep assets below these thresholds.

Remember the core distinction between a trust and a will: a trust avoids probate and stays private, while a will is a public document that must be probated in the Surrogate’s Court.

Frequently Asked Questions

Q: Can I change my mind after funding an irrevocable trust?
A: Generally, no — that permanence is what gives the trust its protective power. This is why thoughtful drafting and keeping enough assets outside the trust are essential before you fund it.

Q: Does the 5-year look-back apply to a revocable trust?
A: No, because a revocable trust offers no Medicaid protection in the first place — you still control the assets, so Medicaid still counts them. Only transfers that remove assets from your estate, such as funding an irrevocable trust, are subject to the look-back.

Q: What happens if I need nursing-home care before five years pass?
A: Transfers made within the 60-month window can trigger a penalty period of Medicaid ineligibility. An elder law attorney can sometimes deploy crisis-planning strategies, but the protection is far stronger when you plan ahead.

Q: Can I still receive income from a New York Medicaid trust?
A: Many irrevocable Medicaid trusts are structured so the grantor receives the income while the principal is protected. The exact terms must be drafted to fit your situation and Medicaid rules.

Talk to Morgan Legal Group

The five-year look-back rewards families who plan early and penalizes those who wait. If you want to protect your home and savings for the next generation across New York State, the time to act is now — not after a health crisis forces your hand.

Russel Morgan, Esq. and the team at Morgan Legal Group help New York families design and fund irrevocable trusts that withstand the Medicaid look-back. Schedule a 30-minute consultation to map out your next steps.