Medicaid Planning and Your New York Estate (5-Year Look-Back)

Medicaid planning is the disciplined, advance structuring of your assets so that long-term care — a nursing home, an assisted-living facility, or in-home aides — does not consume your life savings before government benefits step in. In New York, the single most important rule to understand is the five-year look-back: when you apply for institutional (nursing-home) Medicaid, the agency reviews sixty months of your financial history, and certain transfers made during that window can trigger a penalty period of ineligibility. Done correctly, Medicaid planning protects your home and your legacy. Done carelessly — or too late — it can disqualify you at the worst possible moment. This is precisely the kind of work that demands a fiduciary-grade approach: careful, documented, and coordinated with the rest of your estate plan.

The professional standard here is not “how do I hide assets.” It is “how do I structure assets lawfully, transparently, and early, with the right instruments, so that my care is funded and my family is protected.” Getting it right is a matter of duty, not cleverness.

Why Medicaid Planning Belongs Inside Your Estate Plan

A comprehensive New York estate plan is never a single document. It is four coordinated instruments working together:

• A Will (EPTL §3-2.1) that directs who receives your probate assets, executed with two attesting witnesses, your signature at the end, and publication.
• A revocable or irrevocable trust (EPTL Article 7) — the revocable trust to avoid probate, the irrevocable trust to achieve tax reduction, asset protection, and Medicaid eligibility.
• A durable Power of Attorney (GOL §5-1513), so a trusted agent can manage finances and execute planning if you become incapacitated.
• A Health Care Proxy (NY Public Health Law Article 29-C), appointing an agent for medical decisions.

Medicaid planning lives at the intersection of these documents. The irrevocable trust is the engine of asset protection; the durable power of attorney is the safeguard that lets planning continue if you lose capacity; and the will and health care proxy keep the rest of your affairs aligned. Treating Medicaid planning as a standalone trick, divorced from your will, power of attorney, and trusts, is the most common — and most damaging — mistake we see.

The Five-Year Look-Back, Explained Plainly

When you apply for institutional Medicaid in New York, the agency examines the sixty months (five years) preceding your application. Uncompensated transfers — gifts, transfers to others for less than fair market value, or funding of certain trusts — made during that window can create a penalty period during which Medicaid will not pay for your nursing-home care, even though you are otherwise eligible.

The lesson is simple and unforgiving: time is the most valuable asset in Medicaid planning. Assets moved into a properly drafted irrevocable trust more than five years before you need care are generally outside the reach of the look-back. Assets moved one year before — or after a crisis has already begun — are far harder to protect. This is why the fiduciary-grade answer is to plan early, while you are healthy and have options.

Note: New York currently administers the five-year look-back for institutional (nursing-home) Medicaid. Community-based (home-care) Medicaid rules in New York have been the subject of a separate, evolving look-back implementation. Because these rules change, never rely on a generic online summary — confirm the current standard with counsel before you transfer anything.

The Irrevocable Medicaid Trust: The Core Tool

The instrument at the heart of most New York Medicaid planning is the irrevocable income-only trust, authorized under EPTL Article 7. Used correctly, it allows you to:

• Transfer your home and other assets out of your name so they no longer count against Medicaid’s asset limits — provided the transfer clears the five-year window.
• Retain the right to live in your home for life and to receive income the trust generates.
• Name your children or other loved ones as remainder beneficiaries.
• Preserve your STAR and senior real-property tax benefits when drafted properly.

A few professional cautions belong in plain view:

Feature	Revocable Living Trust	Irrevocable Medicaid Trust
Avoids probate	Yes	Yes
Protects assets from Medicaid	No	Yes (after 5-year look-back)
You can amend/revoke it	Yes	No
Counts toward Medicaid asset limit	Yes	No (after look-back)
Primary purpose	Probate avoidance	Long-term-care asset protection

A revocable living trust does not protect assets from Medicaid — because you retain control, the assets remain countable. Only an irrevocable trust, surrendering certain controls, achieves protection. The trade-off is real, which is exactly why this should never be a do-it-yourself project.

Protecting a Disabled Beneficiary: The Supplemental Needs Trust

If you wish to leave assets to a loved one who is disabled and receiving needs-based benefits, an outright inheritance can disqualify them. The answer is a Supplemental Needs Trust (SNT) under EPTL §7-1.12, which holds funds to enhance the beneficiary’s quality of life without disqualifying them from Medicaid or SSI. Coordinating an SNT with your will and overall plan is a fiduciary obligation when a vulnerable beneficiary is involved.

Medicaid Planning and the New York Estate Tax

Medicaid planning and estate-tax planning are related but distinct disciplines, and a careful plan accounts for both. For 2026, New York’s estate-tax basic exclusion is $7,350,000 for deaths on or after January 1, 2026 through December 31, 2026. New York’s notorious “cliff” sits at 105% of that figure — $7,717,500 — and an estate that exceeds the cliff loses the entire exemption and is taxed from the first dollar, on a progressive scale of 3% to 16%.

Two points matter for Medicaid planners:

1. New York has no gift tax, but gifts made within three years of death are added back to the taxable estate. A gifting strategy designed for Medicaid must be evaluated for its estate-tax consequences as well.
2. Funding an irrevocable trust can remove assets from your taxable estate; funding a revocable trust does not. The choice of instrument has tax effects beyond Medicaid. For the full tax picture, review our New York estate tax guide.

The Fiduciary-Grade Process

What separates a safe Medicaid plan from a dangerous one is discipline. A professional process includes:

• Documentation. Every transfer is papered, valued, and explained, so the application withstands scrutiny.
• Timing. Planning begins early — ideally years before care is needed — to clear the look-back.
• Coordination. The trust, will, power of attorney, and health care proxy are drafted as one system, not four loose pages.
• Honesty. No concealment, no backdating, no shortcuts. The plan must be defensible.
• Contingency. Even in a crisis, lawful strategies (spousal protections, exempt transfers, partial planning) may still help — but they require counsel, immediately.

Frequently Asked Questions

Does a revocable living trust protect my assets from Medicaid?
No. Because you keep the power to amend and revoke it, the assets remain countable. Only an irrevocable trust, drafted under EPTL Article 7 with the proper controls surrendered, can protect assets after the five-year look-back.

Will I lose my home if I go into a nursing home?
Not necessarily. With early planning — typically an irrevocable trust funded more than five years before care is needed — your home can be protected while you retain the right to live in it for life. The key is acting before a crisis.

What happens if I need care before the five years are up?
Transfers within the look-back can trigger a penalty period of ineligibility. That does not mean nothing can be done — spousal protections, exempt transfers, and partial “crisis” planning may still help — but your options narrow sharply, which is why early planning matters so much.

Can my agent do Medicaid planning if I lose capacity?
Only if your durable Power of Attorney (GOL §5-1513) grants the appropriate gifting and trust authority. A standard form without those powers can leave your family unable to act. This is a critical, frequently overlooked safeguard.

Speak With Russel Morgan, Esq.

Medicaid planning is not a form to fill out — it is a fiduciary undertaking that protects your home, your savings, and the people you love. The earlier you start, the more we can protect. Russel Morgan, Esq. and the team at Morgan Legal Group build Medicaid plans that are documented, coordinated, and built to withstand scrutiny across all of New York State.

Schedule your confidential 30-minute consultation »

For a complete overview of how these pieces fit together statewide, see our New York statewide estate planning guide.