A couple from Queens recently sat in my office, distressed. Years ago, they had diligently followed advice to place their home and life savings into a revocable living trust. The goal was simple—to spare their children the time and expense of Surrogate’s Court. They believed their assets were protected. Now, one of them requires long-term nursing care, and they are facing private-pay bills that would decimate their savings in under 18 months. They came to me assuming the trust was a shield. I had to explain that, for Medicaid purposes, it was effectively invisible.
Control Is the Core of the Conflict
A revocable living trust is a powerful instrument for managing assets during your lifetime and ensuring a smooth transition after your death. As the grantor, you retain complete control. You can amend its terms, add or remove assets, change beneficiaries, or even dissolve the trust entirely. This flexibility is its main appeal for estate management.
However, this very control is precisely what creates a problem when planning for long-term care. When you apply for Medicaid in New York, the state reviews your financial resources to determine eligibility. Because you can revoke the trust and reclaim full ownership of the assets at any moment, Medicaid considers every dollar in that trust to be yours. The assets are deemed “available” to you to pay for your care.
The instrument designed to avoid one court—Surrogate’s Court—offers no protection from the financial demands of long-term care. It is a tool being used for a job it was not designed to do.
How New York Law Views Revocable Trust Assets
The state’s position is not arbitrary; it is codified in law. New York Social Services Law § 366 governs Medicaid eligibility, and its provisions on trusts are explicit. Any trust that the applicant or their spouse can revoke is treated as an available resource. There is no ambiguity. The house, the investment accounts, the savings—if they are held in a revocable trust, they are counted toward your resource limit for Medicaid eligibility.
When your countable resources exceed Medicaid’s low threshold, you are required to “spend down.” This is not a strategy; it is a requirement. It means you must use your own money to pay for your care—the very funds you intended to preserve as a legacy—until your assets are depleted to the point of eligibility. For many families, this is a devastating financial and emotional blow. They spend decades building a foundation for the next generation, only to see it liquidated to cover catastrophic healthcare costs.
This is why we see a disconnect. People create revocable trusts for one valid reason—probate avoidance—without being warned of the serious consequences for future long-term care needs.
The Irrevocable Trust: A Deliberate Choice
The alternative for long-term care planning is a very different kind of trust—an irrevocable one. Specifically, a Medicaid Asset Protection Trust (MAPT) is designed with this singular goal in mind. When you transfer assets into a properly structured irrevocable trust, you are making a deliberate and permanent choice. You give up control and access to the principal. You can no longer amend the trust or take the assets back.
Because you have relinquished control, Medicaid no longer considers those assets “available” to you. They are protected for your beneficiaries. Stewardship.
This protection comes with two critical conditions. First, you cannot be your own trustee with discretionary power over the principal. You must appoint someone else—often a trusted child or a professional—to act as trustee, bound by a strict fiduciary duty. Second, the transfer of assets into the trust is subject to a five-year “look-back” period. This means the trust must be funded a full five years before you apply for institutional Medicaid benefits. It is a tool that requires foresight and intentional, early planning, not a last-minute fix.
The choice between a revocable and an irrevocable trust is a choice between two different goals: retaining control for probate avoidance versus relinquishing control for asset protection. A single plan rarely serves both ends perfectly. Your estate plan must reflect a clear understanding of what you are trying to preserve and for whom.
If you have an existing revocable trust and are concerned about future long-term care costs, the prudent step is to understand exactly where you stand. I invite you to schedule a meeting with my office. We will review your current trust documents and asset structure to assess how your plan aligns—or conflicts—with your family’s long-term objectives.
