An irrevocable trust is one of the most reliable tools for protecting your home and savings from the cost of long-term nursing care, but in New York it only works if you plan early enough to clear the Medicaid 5-year look-back. When you transfer assets into a properly drafted irrevocable trust, those assets are generally no longer counted as available resources for institutional (nursing-home) Medicaid eligibility. The catch is timing: New York’s Department of Health reviews the five years of financial records immediately before your application, and uncompensated transfers made during that window can trigger a penalty period of Medicaid ineligibility. This guide walks through how the process actually works, what it costs in time and effort, and how to build a realistic timeline.
What an Irrevocable Trust Actually Does
Under New York’s Estates, Powers and Trusts Law (EPTL) Article 7, a trust is a legal arrangement where a grantor transfers assets to a trustee to hold for beneficiaries. An irrevocable trust generally cannot be amended or revoked once it is signed, and that permanence is precisely what gives it power for Medicaid and estate-tax planning.
Because you give up direct control over the assets, the law treats them as no longer yours. That is the opposite of a revocable living trust, where you keep full control and the right to amend or revoke at any time. A revocable trust avoids probate and manages incapacity, but it does not remove assets from your taxable estate and does not protect them from Medicaid. For asset protection and Medicaid planning, irrevocability is the price of admission. To compare these structures side by side, see our trusts overview.
A Medicaid asset-protection trust is typically structured so that:
- You (the grantor) may retain the right to the income the trust produces.
- You give up the right to the principal, which is what removes it from your countable resources.
- A trusted person serves as trustee and owes fiduciary duties to the beneficiaries.
- Your home can be transferred in while you keep the right to live there for life.
The 5-Year Look-Back: How the Clock Works
The look-back is a review period, not a waiting period for everyone. When you apply for institutional (nursing-home) Medicaid in New York, the state examines the prior 60 months of financial records. Any asset transferred for less than fair market value during that window can create a penalty.
It is important to understand the distinction:
| Concept | What it means |
|---|---|
| Look-back period | The 60 months of records New York reviews when you apply for nursing-home Medicaid. |
| Penalty period | A stretch of ineligibility calculated from uncompensated transfers found in the look-back. |
| “Seasoning” the trust | Waiting out the 5 years so transfers no longer fall within the look-back window. |
In practice, this means the single most valuable thing you can do is start early. Assets transferred into an irrevocable trust more than five years before you need care are fully outside the look-back and create no penalty.
Note on timing: New York’s look-back currently applies to nursing-home (institutional) Medicaid. Community-based and home-care Medicaid rules have been evolving, so always confirm the current standard for the specific benefit you need before transferring assets.
A Realistic Timeline and Cost Picture
Clients consistently want to know two things: how long will this take, and what does it involve? Here is the practical arc.
Phase 1 — Design and Drafting (typically weeks)
We review your assets, your family situation, and your goals, then draft an irrevocable trust tailored to your circumstances. This is also where we decide which assets go in (often the home and a portion of savings) and which stay out (usually enough liquid funds for everyday needs and emergencies).
Phase 2 — Funding the Trust (weeks to a few months)
A trust only protects what is actually transferred into it. Funding means re-titling the home by deed, moving accounts, and updating records. An unfunded irrevocable trust protects nothing, so this step is not optional.
Phase 3 — The 5-Year Seasoning Window
This is the part no lawyer can shorten: the calendar. Once funded, the assets must remain in the trust long enough that, when you eventually apply, the transfer date falls outside the 60-month look-back.
Phase 4 — Ongoing Administration
The trustee manages the assets, files any required tax returns, and keeps records. For more on a trustee’s responsibilities, see our trust administration page.
On cost: legal fees vary with complexity and are quoted before engagement. Separately, trustees in New York may be entitled to statutory commissions under the schedules set out in the EPTL and the Surrogate’s Court Procedure Act (SCPA); we explain how those schedules apply to your situation rather than quoting a one-size-fits-all figure. The headline takeaway is that the trust’s value is measured against the cost of long-term care it shields, which in New York can run far higher than the planning fees.
Trustee Duties You Should Expect
Whoever you name as trustee takes on real legal obligations under New York law, including:
- The prudent investor standard for managing trust assets (EPTL Article 11-A).
- A duty of loyalty to act in the beneficiaries’ interest, not their own.
- A duty to account to the beneficiaries for how assets are handled.
Choosing a reliable, organized trustee is as important as the drafting itself, because a poorly administered trust can be challenged.
How This Fits With the Rest of Your Plan
An irrevocable trust does not replace your other documents. Unlike a will, which is public and must be probated in the Surrogate’s Court, a trust keeps your affairs private and avoids probate for the assets it holds. To understand that contrast, read trust vs. will. And if you are protecting benefits for a loved one with disabilities, a different instrument applies: a supplemental (special) needs trust under EPTL 7-1.12 preserves means-tested benefits like Medicaid and SSI without disqualifying the beneficiary.
For high-net-worth New Yorkers, the irrevocable trust also does estate-tax work that a revocable trust cannot. New York’s 2026 estate-tax basic exclusion is $7,350,000, with a notorious “cliff” at 105% of that figure — $7,717,500 — above which an estate loses the entire exemption. Moving assets out of your taxable estate through irrevocable planning can be decisive for estates near that line.
Frequently Asked Questions
Does an irrevocable trust avoid the look-back entirely?
No. The transfer into the trust is what starts the 5-year clock. The trust protects the assets, but you still have to outlast the 60-month look-back for nursing-home Medicaid.
Can I get income from the trust?
Typically yes. Many Medicaid asset-protection trusts let the grantor keep the income while giving up access to the principal. Retaining principal access, however, would defeat the protection.
What if I need care before five years pass?
Even partial planning can help. Strategies exist to manage a penalty period, and some assets may still be sheltered. The earlier you plan, the more options remain on the table.
Can I change the trust later if my mind changes?
Generally no — that permanence is what makes it work. This is why careful design with experienced counsel matters before you sign. Compare it with a revocable living trust if flexibility is your priority.
Speak With a New York Trusts Attorney
The look-back rewards early planning and punishes delay, so the best time to set up an irrevocable trust is years before you think you will need care. Russel Morgan, Esq. and the team at Morgan Legal Group help New Yorkers across the state design, fund, and administer trusts that protect what they have built.
Schedule a consultation: https://calendly.com/russel-morgan/30min
Further reading from Morgan Legal Group: how an irrevocable trust works.