Preserving assets from nursing home costs requires careful Medicaid planning. A revocable living trust allows individuals to retain control and avoid probate but does not exempt assets from nursing home expenses since Medicaid counts those resources as available for spend-down. A properly structured and fully funded irrevocable trust transfers ownership to a trustee and can preserve qualifying assets. Transfers into an irrevocable trust fall under New York’s five-year look-back period, making timing a critical factor in a successful plan.
At Davies Law Firm, our Syracuse estate planning and elder law attorneys guide families across Onondaga County and Central New York through asset preservation and long-term care planning. Frederick P. Davies established the firm in 1993 and has delivered over 1,000 seminars on living trusts and Medicaid planning. Working alongside him, William P. Davies holds a Heckerling LL.M. in estate planning from the University of Miami Law School and handles the precise trust structuring and funding strategies required to preserve assets under current law.
Taking the right steps today can preserve a home, savings, and family legacy for those planning in advance or arranging long-term care for a loved one. Our Central New York Medicaid planning attorneys prepare tailored strategies that meet Medicaid requirements while achieving financial and personal goals. Contact Davies Law Firm at (315) 472-6511 to schedule a telephone conference and discuss elder law and asset preservation options.
Can a Trust Preserve Assets from Nursing Home Costs in New York?
Only specific trust structures preserve assets from long-term care expenses. An irrevocable trust created for Medicaid asset preservation and properly funded more than five years prior to a nursing home Medicaid application allows the assets it holds to remain exempt from countable resources. A revocable living trust does not provide this benefit, as the trustor retains full ownership and control over all trust property.
Nursing home care in Central New York averages over $14,000 per month under New York’s $14,146 regional rate for 2026. Medicaid acts as the payer of last resort, which requires applicants to spend down countable resources under their control before public coverage contributes.
Asset preservation planning operates within this structure. When assets transfer into a properly funded irrevocable trust outside the look-back window, legal ownership shifts to the trust, allowing Medicaid to cover nursing home care while assets remain available to pass to family members. New York Medicaid eligibility rules are established under Social Services Law Section 366, and the five-year look-back period is governed by 42 U.S.C. Section 1396p(c).
Key Takeaway: A revocable living trust does not preserve assets from nursing home costs because the trustor retains control. An irrevocable trust can preserve assets when it is properly drafted and funded more than five years before a nursing home Medicaid application.
Frederick P. Davies can review which of your assets are countable and explain how an irrevocable trust would apply to them.
What Is the Difference Between a Revocable and Irrevocable Trust?
The core difference comes down to control. In a revocable living trust, the trustor keeps the power to amend terms, change beneficiaries, remove assets, and revoke the trust completely. In an irrevocable trust, the trustor surrenders that authority, and the trust holds assets under terms that cannot be freely rewritten.
How Does a Revocable Living Trust Work in New York?
A revocable living trust is created during the trustor’s lifetime, with the trustor serving as trustee and primary beneficiary. When properly funded, meaning real property is deeded to the trust and financial accounts are retitled in the name of the trust, the held assets pass to beneficiaries outside probate. This process avoids executor commissions that can reach up to 5% of the probate estate, while allowing a trustee to administer assets immediately instead of waiting out potential will contests.
A revocable trust does not alter how Medicaid views assets. Since the trustor can revoke the trust at any time and reclaim property, all trust assets remain countable resources. A revocable trust also does not protect assets from creditors, as New York EPTL Section 7-3.1 leaves any trust created for the trustor’s own benefit reachable by personal creditors.
How Does an Irrevocable Trust Work in New York?
An irrevocable trust designed for Medicaid asset preservation is funded during the trustor’s lifetime, with an independent trustee, such as an adult child, managing property for the trust creators. The trustor surrenders the right to revoke the trust or access trust principal. Under EPTL Section 7-1.9, a lifetime trust can be amended or revoked only with the written consent of every person holding a beneficial interest.
When the trustor no longer owns or controls the assets, those assets can become exempt from countable resources once the five-year look-back period passes. The trust structure can allow the trustor to receive trust income, retain the STAR school tax exemption on a primary residence held by the trust, and preserve a step-up in tax basis for beneficiaries upon death.
| Feature | Revocable Living Trust | Irrevocable Trust for Asset Preservation |
|---|---|---|
| Trustor keeps control of assets | Yes | No |
| Can be revoked or amended freely | Yes | No |
| Assets countable for nursing home Medicaid | Yes | No, after the look-back period |
| Five-year look-back applies to transfers in | No | Yes |
| Avoids Surrogate’s Court probate when funded | Yes | Yes |
| Helps preserve assets from nursing home costs | No | Yes, when properly funded in advance |
Key Takeaway: Only an irrevocable trust removes assets from the trustor’s countable resources, and only when properly drafted and funded well before long-term care is required. A revocable living trust avoids probate but leaves assets countable.
William P. Davies can walk through which trust structure fits your goals for both probate avoidance and long-term care planning.
Why Doesn’t a Revocable Living Trust Preserve Assets from Nursing Home Costs?
A revocable living trust leaves assets countable, as the trustor retains full legal ownership. The trustor can amend trust terms, withdraw principal, sell trust property, or terminate the trust to reclaim all property. Medicaid evaluates what an applicant holds the legal power to access rather than whose name appears on a deed or financial account.
While funding a revocable trust helps bypass probate, it does not impact eligibility for nursing home Medicaid. Real estate held in a revocable trust receives the exact same treatment as property held in the trustor’s individual name, along with bank accounts, brokerage accounts, and certificates of deposit.
While funding a revocable trust helps bypass probate, it does not impact eligibility for nursing home Medicaid. Real property held in a revocable trust receives the exact same treatment as property held in the trustor’s individual name, along with bank accounts, brokerage accounts, and certificates of deposit.
Key Takeaway: A revocable living trust leaves all held assets fully accessible to the trustor, causing Medicaid to count those assets when determining eligibility for long-term care.
How Does an Irrevocable Trust Help Preserve Assets for Your Family?
An irrevocable trust preserves family assets by shifting legal ownership away from the trustor. Through proper Medicaid planning, the trustor transfers the title of specific assets by deeding real estate and retitling financial accounts into the name of the trust, allowing a trustee to hold and manage those assets for named beneficiaries. The trustor does not serve as trustee and surrenders all authority to revoke the trust or withdraw principal.
Once transfers are complete and the 60-month look-back period passes, assets held in the irrevocable trust become exempt from countable resources. Medicaid will then pay for long-term care while trust assets remain preserved to pass to family members upon the trustor’s death. The trustor can continue receiving trust income, and proper trust terms can keep trust property separated from claims of beneficiary creditors.
Asset preservation depends on complete funding. A signed trust document that lacks transferred assets holds no property, leaving retitlings incomplete and assets countable in the trustor’s individual name. Effective planning requires deeding real property, transferring financial accounts, and updating beneficiary designations to match the trust structure.
Key Takeaway: An irrevocable trust preserves assets by transferring legal ownership away from the trustor. This outcome requires proper legal structure, full asset funding, and completing transfers more than five years before a nursing home Medicaid application.
Frederick P. Davies can explain how a Medicaid asset preservation trust would be structured for your family and which assets belong in it.
Medicaid Planning Attorneys in Syracuse – Davies Law Firm
Frederick P. Davies, Esq.
Frederick P. Davies, Esq., is the founder and senior attorney of Davies Law Firm. He earned his Juris Doctor from Syracuse University College of Law and is admitted to practice in New York and Connecticut, as well as before the United States Supreme Court, the United States Tax Court, and the Federal District Court for the Western District of New York.
Attorney Davies began his estate planning practice while serving as a Navy Judge Advocate and later served as an instructor and subject matter expert on estate planning at the United States Air Force Judge Advocate General’s School. He founded Davies Law Firm in 1993 and has presented more than 1,000 seminars on living trusts, estate and tax planning, long-term care, Medicaid, and other elder law matters.
William P. Davies, Esq.
William P. Davies, Esq., is a partner at Davies Law Firm. He earned his Juris Doctor, magna cum laude, from Albany Law School and an LL.M. in estate planning from the University of Miami School of Law. He is admitted to practice in New York and Florida.
Attorney Davies has published legal scholarship in the Albany Law Review and Syracuse Law Review and has presented on New York powers of attorney, probate, and estate planning issues. He also served as President of the Estate Planning Council of Central New York from 2023 to 2024 and is a member of several professional organizations focused on trusts, estates, and elder law.
What Is New York’s Medicaid Look-Back Period?
For nursing home Medicaid in New York, the look-back period spans five years, or 60 months, measured backward from the month of application (or up to three months prior if requesting retroactive coverage). During this review, asset transfers for less than fair market value, including transfers into an irrevocable trust, are evaluated and can trigger a penalty period during which Medicaid will not cover institutional care. These transfer rules are established under Social Services Law Section 366(5)(e).
The penalty length is calculated by dividing the uncompensated value of transferred assets by the regional average monthly cost of nursing home care published by the New York State Department of Health. Asset transfers completed more than five years prior to submitting an application fall outside this look-back window and carry no penalty. The Onondaga County Department of Social Services reviews Medicaid applications for local residents and evaluates financial records covering the full 60-month timeframe.
Key Takeaway: New York applies a five-year look-back period to nursing home Medicaid applications. Asset transfers completed inside this 60-month window, including transfers into an irrevocable trust, can create a penalty period, whereas transfers completed prior to the window carry no penalty.
William P. Davies can review your transfer history and explain how the look-back period applies to your circumstances.
What Happens to the Family Home If a Spouse Still Lives There?
Under nursing home Medicaid rules, the primary home is exempt from countable resources while a spouse continues to reside there. Exempt status also applies if a minor child (under age 21) or a blind or permanently disabled child of any age resides in the home, or if the applicant expresses an intent to return home and home equity remains under state limits ($1,130,000 in 2026). Simply owning the home does not guarantee an exemption. For example, if a single applicant moves into a nursing home with no plans to return and no qualifying family member living in the house, the property loses its exempt status and becomes a countable asset.
When no qualifying relative resides in the residence and no intent to return applies, the property becomes a countable resource that may need to be sold to satisfy spend-down requirements before public coverage contributes to care costs. For most Central New York families, the primary residence represents their largest financial asset, making it the property most frequently addressed through advance planning.
Deeding real property to a properly structured irrevocable trust more than five years prior to an application allows the home to be preserved for children rather than converted to cash for nursing care. The trust can allow the trustor to keep the STAR school tax exemption, retain the legal right to reside in the home, and pass the property to beneficiaries with a step-up in tax basis that reduces capital gains taxes upon a future sale. Transferring a home directly to a child, by contrast, exposes the property to personal creditors of that child while leaving the parent without the legal right to reside in or control the home.
Key Takeaway: For nursing home Medicaid, the home is exempt from countable resources while a spouse, minor child, or disabled child resides there, or under an intent-to-return provision. Deeding a home to a properly funded irrevocable trust more than five years in advance can preserve the property for family members.
How Do You Properly Fund a Trust to Preserve Assets in New York?
Funding means transferring the legal title of each asset into the name of the trust. A trust document alone accomplishes nothing, as the trust holds only assets that have been formally conveyed to it.
The mechanics vary by asset type:
- Real property: A new deed conveys a residence, vacation home, or rental property to the trustee, and the deed is recorded with the county clerk where the property sits.
- Bank and credit union accounts: Accounts are closed and reopened, or retitled, in the name of the trust with the trust’s tax identification information on file.
- Brokerage and investment accounts: Financial custodians retitle accounts to the trustee upon receiving the trust document and required transfer forms.
- Certificates of deposit and savings bonds: These instruments are reissued or retitled to the trust as they mature.
- Beneficiary designations: Life insurance policies and annuities can be updated to name the trust as beneficiary when aligned with the overall plan, with the firm preparing and processing these updates during the funding process.
- Business interests: Membership interests in a limited liability company or shares in a closely held corporation are assigned to the trust, subject to terms within the operating agreement.
Retirement accounts, including IRAs or 401(k) plans, require different handling, as transferring ownership to a trust during life triggers immediate income tax liability. These accounts are coordinated through beneficiary designation planning instead.
For an irrevocable trust, the exact funding date governs the statutory timeline. The 60-month look-back clock begins when asset transfers are complete rather than when trust documents are executed, leaving unfunded or partially funded assets countable while delaying Medicaid eligibility.
Frederick P. Davies can identify which of your assets require retitling and handle necessary deeds and transfers involved.
When Should You Create a Trust to Preserve Assets from Nursing Home Costs?
Planning is most effective when completed more than five years before long-term care is anticipated, as that represents the 60-month timeframe measured by the Medicaid look-back period. Once those 60 months pass, asset transfers into an irrevocable trust fall outside state review entirely.
Delaying planning limits available options, as assets titled in an individual’s own name remain countable resources and transfers made after a health decline begins can trigger a penalty period calculated from New York’s regional rate. While planning remains possible closer to a nursing home admission and alternative legal strategies may apply, available choices become narrower, and outcomes prove less predictable.
With roughly 70% of individuals turning 65 requiring long-term care, the practical approach addresses asset preservation while health remains sound and no Medicaid application is pending. Individuals frequently complete this planning in their sixties or early seventies, establishing trusts alongside wills, powers of attorney, and health care proxies.
Key Takeaway: New York applies a five-year look-back period to nursing home Medicaid, so an irrevocable trust must be created and fully funded more than 60 months before care is needed. Asset transfers completed inside that window remain subject to a penalty period.
Preserve Your Assets With Syracuse Medicaid Planning Attorneys
Families often seek quality long-term care for a spouse or parent while keeping the home and savings within the family. Both goals can be achieved through properly structured and timely funded asset preservation planning.
Frederick P. Davies and William P. Davies handle Medicaid asset preservation planning, Living trust estate plans, estate administration, and probate for clients throughout Onondaga County and surrounding Central New York counties, including matters before local Surrogate’s Courts and Medicaid applications filed with county social services departments.
Call Davies Law Firm at (315) 472-6511 to arrange a telephone conference. Our office at 210 E Fayette St in Syracuse serves families across Central and Upstate New York. We can review your assets, explain how the five-year look-back applies to your timeline, and prepare the trust and funding documents your plan requires.
Frequently Asked Questions About Trusts and Nursing Home Asset Preservation
Does an irrevocable trust guarantee my assets will be preserved from nursing home costs?
No. Asset preservation depends on proper trust structure, complete asset funding, and transfer timing. Assets placed into an irrevocable trust more than 60 months prior to applying for nursing home Medicaid become exempt from countable resources once fully funded. An unfunded trust provides no asset preservation benefit, leaving those assets fully countable.
An unfunded trust provides no asset preservation benefit, l.
Can I be the trustee of my own irrevocable trust in New York?
For Medicaid asset preservation, the trustor does not serve as trustee. If the trustor retains authority over the principal as trustee, they maintain personal control over the property, making those assets countable for Medicaid eligibility. Instead, an adult child or another trusted representative serves as trustee.
What happens if I need nursing home care before the five-year look-back period ends?
Applying for nursing home Medicaid within 60 months of transferring assets into a trust triggers a penalty period. The state calculates this penalty by dividing the total uncompensated value of transferred assets by the regional average monthly cost of nursing home care, delaying when Medicaid coverage begins. Alternative planning options may apply, making legal review essential before submitting an application.
Can a revocable trust be changed to an irrevocable trust later?
Yes, but creating a new irrevocable trust is the preferred approach. While a revocable trust can technically be amended, standard practice is to establish an irrevocable trust and transfer the assets into it. The five-year look-back clock begins on the exact date assets are transferred into the new irrevocable trust, not when the original revocable trust was created.
Does New York Medicaid count assets held in a properly funded irrevocable trust?
Assets held in a properly structured and funded irrevocable trust are exempt from countable resources once transfers fall outside the five-year look-back period. Income distributed from the trust to the trustor receives separate treatment and counts toward monthly income limits.
What types of assets are commonly placed in a trust for Medicaid planning?
Appropriate assets include a primary residence, vacation properties, rental real estate, bank accounts, credit union accounts, brokerage accounts, certificates of deposit, and closely held business interests. Retirement accounts, including IRAs or 401(k) plans, are coordinated through beneficiary designation planning instead, as transferring ownership during life triggers immediate income tax liability.
Do beneficiary designations need to be updated when I create a trust?
Yes. Life insurance policies, annuities, and retirement accounts transfer by beneficiary designation rather than under trust or will provisions, causing uncoordinated accounts to bypass the overall plan. Attorneys prepare and process beneficiary designation updates to align accounts with the trust objectives.
