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

An irrevocable trust is one of the most powerful Medicaid-planning tools available in New York — but it only works when it is funded well ahead of need, because assets transferred into the trust are subject to a 5-year look-back for nursing-home (institutional) Medicaid. In plain terms: when you apply for long-term-care Medicaid in New York, the agency reviews the 60 months before your application date. Assets you properly moved into a correctly drafted irrevocable trust before that window begins are generally protected; transfers made inside the window can trigger a penalty period of ineligibility. At Morgan Legal Group, we don’t just draft a single document — we prepare the full suite of trust and estate-planning instruments that make a Medicaid-protection plan hold together. This services-overview walks through how the look-back works, where the irrevocable trust fits, and the breadth of documents that surround it.

What the 5-Year Look-Back Actually Reviews

The look-back is a review period, not a penalty by itself. When a New Yorker applies for institutional (nursing-home) Medicaid, the Department of Social Services examines financial transfers made during the prior 60 months. Uncompensated transfers — gifts, or assets moved into an irrevocable trust — can create a penalty period during which Medicaid will not pay for care, even though the applicant is otherwise eligible.

This is precisely why timing matters. An irrevocable trust funded today starts the clock today. Wait until a health crisis, and the same transfer may sit squarely inside the look-back window.

Key point: New York’s irrevocable trusts are governed by the Estates, Powers and Trusts Law (EPTL) Article 7. The structure of the trust — who controls it, who benefits, and whether the grantor retained any access to principal — determines whether the transfer counts as protected.

Why Irrevocable — and Not Revocable

Many clients first ask about a revocable living trust. A revocable trust is excellent for avoiding probate, maintaining privacy, and managing incapacity — but because the grantor keeps full control and the right to amend or revoke, the assets remain available to the grantor and therefore are not protected for Medicaid, and they stay in the taxable estate. For Medicaid asset protection you need an irrevocable trust, which generally cannot be amended and which removes the grantor’s control over principal.

Feature	Revocable Living Trust	Irrevocable Trust
Grantor can amend / revoke	Yes	No (generally)
Avoids probate	Yes	Yes
Privacy	Yes	Yes
Medicaid asset protection (5-yr look-back)	No	Yes
Removes assets from taxable estate	No	Yes
Estate-tax reduction	No	Yes

You can compare these structures in more depth on our trusts overview, and weigh the trade-offs of control versus protection on our revocable living trust and irrevocable trust service pages.

The Breadth of Documents We Prepare Around the Trust

A Medicaid-protection plan is rarely one piece of paper. As a services overview, here is the range of instruments Morgan Legal Group routinely drafts so that the irrevocable trust functions as intended and the rest of the estate stays coordinated:

• The irrevocable trust agreement itself — drafted under EPTL Article 7 with carefully chosen retained rights (such as the right to income, or a limited power of appointment) so the plan protects principal without surrendering more than necessary.
• Funding and transfer documents — deeds, assignments, and beneficiary designations that actually move assets into the trust. An unfunded trust protects nothing.
• Pour-over will — to direct any assets left outside the trust at death.
• Durable power of attorney — so a trusted agent can continue planning and manage finances if you lose capacity.
• Health-care proxy and living will — for medical decision-making.
• Supplemental (Special) Needs Trust — when a beneficiary is disabled, this preserves means-tested benefits like Medicaid and SSI under EPTL 7-1.12. See our special needs trust page.
• Trustee guidance and accountings — supporting the ongoing administration of the trust after it is signed.

This breadth is the point: a single document rarely solves a long-term-care problem. Coordinated documents do.

The Trustee’s Role — and Why It Matters for Medicaid

Because an irrevocable Medicaid trust depends on the grantor not controlling the principal, the trustee is central. In New York a trustee owes real fiduciary duties: the prudent-investor standard under EPTL Article 11-A, a duty of loyalty to the beneficiaries, and a duty to account for trust activity. Choosing the right trustee and supporting them with proper administration keeps the protection intact. Our trust administration service exists for exactly this ongoing work.

New York’s commission framework for fiduciaries is set by statute under the EPTL and the Surrogate’s Court Procedure Act (SCPA); we will walk you through the applicable schedules rather than quoting a figure that may not fit your situation.

Trust vs. Will in a Medicaid Plan

A common misunderstanding: a will does not protect assets from the look-back. A will is public and must be probated in the Surrogate’s Court after death, and it does nothing during life to shield assets. A properly funded trust avoids probate, stays private, and — when irrevocable — provides the asset protection a will cannot. For a fuller comparison, see trust vs. will.

Don’t Forget Estate Tax

Medicaid planning and estate-tax planning often travel together, because an irrevocable trust can address both. New York’s estate tax for 2026 uses a basic exclusion amount of $7,350,000. New York also has a notorious “cliff”: at 105% of the exclusion — $7,717,500 — an estate loses the entire exemption, not just the excess. Because an irrevocable trust can remove assets from the taxable estate, it can help keep an estate below the cliff while also serving the Medicaid plan.

Frequently Asked Questions

Does every transfer to an irrevocable trust trigger a Medicaid penalty?
Only transfers made within the 60-month look-back for institutional Medicaid are reviewed and can create a penalty. Properly funded transfers made before that window generally do not.

Can I change my mind after creating an irrevocable trust?
An irrevocable trust generally cannot be amended or revoked — that loss of control is exactly what makes the assets protected. This is why careful, custom drafting under EPTL Article 7 is essential before signing.

Will an irrevocable trust also help with estate taxes?
Yes. Because the assets leave your taxable estate, an irrevocable trust can reduce New York estate-tax exposure — important given the 2026 cliff at $7,717,500.

What if my beneficiary has special needs?
We use a Supplemental (Special) Needs Trust under EPTL 7-1.12 so the inheritance does not disqualify a disabled beneficiary from Medicaid or SSI.

Speak With a New York Trusts Attorney

The right time to use an irrevocable trust is before you need care — and the right plan is a coordinated set of documents, not a single form. Morgan Legal Group prepares the full range of trust and estate-planning instruments for clients across New York State. To map your timeline and your options, schedule a consultation with Russel Morgan, Esq.

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