What are they used for?
For nursing-home Medicaid planning, a properly structured irrevocable trust may hold assets that are unavailable to the applicant. Funding it can be a transfer subject to the 60-month lookback. Waiting five years does not cure a trust that still makes principal available. Community-based care has different rules that must be checked separately.
Protecting the home. The house is usually the largest asset and the one families most want to preserve. A trust can hold it while permitting you to continue living there.
Estate tax planning. Relevant where an estate approaches New York’s exclusion threshold, particularly given the cliff.
Providing for a beneficiary who cannot manage funds. Including a beneficiary receiving needs-based benefits — see Special & Supplemental Needs Trusts.
What you give up
Worth stating without softening.
You cannot take the assets back on your own. Limited flexibility can be built in — the ability to change beneficiaries, a trust protector, retained income rights — and with the agreement of the trustee and the beneficiaries a trust can sometimes be modified or unwound. What it cannot be is a decision you make alone.
Trustee selection and retained powers matter. An irrevocable trust does not universally require the person creating it to use a different trustee, but retained access, control and distribution rights can defeat the intended Medicaid or creditor protection. The structure must fit its purpose.
Nursing-home Medicaid uses a 60-month transfer lookback. Funding a trust when care is already needed can create a penalty unless an exception applies. Crisis planning still requires an assessment of lawful alternatives rather than an assumption that nothing can be done.
There are tax consequences to weigh. How the trust is drafted affects income taxation, and whether assets receive a step-up in basis at death. Getting this wrong can cost beneficiaries more than the trust saved.
Execution requirements in New York
Under EPTL §7-1.17, a lifetime trust must be written and executed by its creator and, unless the creator is the sole trustee, at least one trustee. Execution must include the required acknowledgment or signatures of two witnesses.
As with a will, the formality is not a technicality. A defectively executed trust may not do what it was meant to do at exactly the moment it is being relied upon.
Frequently asked questions
What is the difference between a revocable and an irrevocable trust?
A revocable trust can be changed or cancelled and provides no asset protection. An irrevocable trust generally cannot be undone by the person who created it, which is why it can protect assets from creditors and from long-term care costs.
Can I live in my house if it is in an irrevocable trust?
Typically yes, where the trust is drafted to permit it. The arrangement has to be structured carefully, and the Medicaid consequences depend on the specific terms.
How long before I need care should I set up a trust?
For nursing-home Medicaid, funding may be subject to a 60-month lookback. Start planning early, but trust terms and transfer exceptions also matter. Community-care rules must be assessed separately.
Can an irrevocable trust ever be changed?
Sometimes. With the agreement of the trustee and the beneficiaries, an irrevocable trust can in some cases be modified or unwound. It cannot be changed unilaterally by the person who created it, and flexibility is best built in at the drafting stage.
Does this firm handle Medicaid applications?
Yes. Loom Light Legal handles Medicaid planning and application preparation, including financial-document review and work with the local Department of Social Services. The scope is agreed in a written engagement.
Related: Estate Planning Advisory · Wills · Powers of Attorney · back to Estate Planning
Written by Dale Riedel, Esq. · Admitted in New York, Bar No. 5837539
Sources: New York statute · Official guidance
Last reviewed October 6, 2026