As New York Estate Planning & Elder Law Attorneys, we are often asked by our clients:
- How do I protect my home from New York probate and nursing home costs?
- Should I file a life estate deed to protect my home from New York probate and nursing home costs?
- Should I create a living trust protect my home from New York probate and nursing home costs?
- Should I file a transfer on death deed to protect my home from New York probate and nursing home costs?
There are five options to protect your NY home from the costs of probate and nursing home costs? Â You will still be entitled to property tax exemptions with all of these. Which of the five options is best for you depends on your answers to the following questions:
- How long have you owned your home and how much did you pay for it?
- Do you intend to sell your home within the next few years?
- What other assets do you own?
- Do you have any disabled children?
- Do any of your children live with you?
- Do any of your siblings live with you?
- Do you have long term care insurance?
- How is your health and your spouse’s health?
Consult with an accountant and Elder Law Attorney to determine which of these planning options is best for you and your family:
1. LIFE ESTATE DEEDÂ whereby you deed your home to your children and retain life use.
The advantages of the NY life estate deed are:
- Preserves your assets from nursing home costs five years after the deed is filed.
- Avoids probate.
- Your children have the stepped-up cost basis when they sell the home.
The disadvantages of a NY life estate deed are:
- If you decide to sell your home, the five-year look-back period would start over with your new home.
- If your children file bankruptcy or are sued, the home will be affected.
- You will not be entitled to the $500,000 exclusion on capital gains if you sell your home.
- You may have a problem finding a good rehab facility if you are hospitalized and do not have other substantial other assets
2. IRREVOCABLE LIVING TRUST whereby your home Is deeded to your children, as Trustees. The advantages of a NY irrevocable trust are:
- Preserves your assets from nursing home costs five years after the deed is filed.
- Avoids probate.
- If you decide to sell your home, the trustees can purchase another home for you with the proceeds which don’t affect the five-year look-back period.
- You can place other assets in the name of trust to protect them.
The disadvantages of a NY irrevocable trust are:
- Your children would not have the stepped-up cost basis when they sell the home. Therefore, they will pay capital gains tax on the increase in value from what you originally paid for the home.
- You may have a problem finding a good rehab facility if you are hospitalized and do not have other substantial other assets.
3. REVOCABLE TRUST avoids probate and results in no capital gains tax, but it does not protect your home from nursing home costs.
4. TRANSFER ON DEATH DEEDÂ avoids probate but it does not protect your home from nursing home costs and Medicaid estate recovery.
5. POWER OF ATTORNEY if you do not use options 1 or 2 before being admitted to a nursing home, the power of attorney, if it has gifting powers, can be used to:
- Gift approximately one-half of your assets, including the proceeds of the sale of your home, to your children utilizing emergency Medicaid Planning with Promissory Notes.
- Transfer your home to your caregiver child or a disabled child without incurring a Medicaid penalty .
- Transfer your home to your siblings without incurring a Medicaid penalty .
- Transfer your home to your spouse without incurring a Medicaid penalty.
For further information, read our 2025 Medicaid guide.
Call or text experienced NY estate planning attorney Robert Friedman at 716.541.3405 for a free estate planning consultation.