I recently met with a family from Brooklyn whose father had suffered a severe stroke. He was a retired contractor who built a comfortable life—a paid-off home, a healthy investment portfolio. His children assumed his assets would cover his care. They were shocked when I explained the reality. A nursing home in New York can cost upwards of $15,000 a month, and without a plan, their father’s entire life savings could be spent down to nearly zero before he qualified for Medicaid.
This is not a rare situation. It is a financial and emotional crisis that unfolds in law offices across the state every week. The conversation is always difficult. Planning for long-term care is not about anticipating decline; it is about intentional stewardship. This is the deliberate act of structuring your assets to ensure a lifetime of work serves your family, not just the high cost of medical care.
The Five-Year Clock and Your Assets
When we discuss long-term care, the conversation inevitably turns to Medicaid. It is the primary payer for long-term care in the United States, but it is a means-tested program. To qualify, an individual must have very limited assets. This forces many families into a “spend-down,” where they exhaust personal savings on care until they become eligible.
Many people believe they can simply give their assets away to their children just before they need care. This is a critical misunderstanding of the law. New York has a “look-back” period for asset transfers. Under New York Social Services Law § 366(5), Medicaid reviews all financial transactions for the 60 months—five full years—prior to the application date. Any assets gifted or transferred for less than fair market value during that window can trigger a penalty period, making the applicant ineligible for Medicaid benefits for a certain length of time.
The five-year clock starts ticking the moment a transfer is made. Waiting for a health crisis to begin planning means it is often too late. The prudent approach is to act well before care is needed, creating a structure that protects your legacy while preserving your eligibility for future assistance.
Using Trusts for Generational Stewardship
How do we plan for this contingency? For many of my clients, the most effective instrument is an irrevocable trust, often called a Medicaid Asset Protection Trust. By placing assets like your home or investments into a properly structured irrevocable trust, you legally relinquish direct control. The assets are no longer yours for Medicaid qualification purposes—provided the transfer was made outside the five-year look-back period.
This does not mean you lose all benefit. You can continue to live in a home held by the trust. You can receive income generated by the trust’s assets. You appoint a trustee—often a trusted family member or professional—who has a fiduciary duty to manage the assets according to the terms you established. That trustee acts as a steward, protecting the assets for your designated beneficiaries, such as your children or grandchildren.
Setting up a trust is not a simple transaction. It is a profound statement about your priorities. It declares that the home you worked 30 years to pay for should be a source of stability for the next generation, not a line item to be liquidated for a nursing home bill. It is about ensuring your legacy endures.
Appointing Your Decision-Makers
Asset protection is only one part of the equation. Just as important is planning for incapacity—the potential inability to make your own decisions. Without legal documents in place, the Surrogate’s Court may have to appoint a guardian to manage your affairs. That process can be slow, expensive, and deeply intrusive. You can avoid this by putting your choices in writing ahead of time.
A Health Care Proxy is a document where you name an agent to make medical decisions for you if you are unable. This is the person who will speak with doctors and ensure your wishes for treatment are honored. The responsibility is immense, and the person you choose must be someone you trust implicitly to act in your best interests.
A Durable Power of Attorney serves a similar function for your financial life. You appoint an agent to handle financial matters—from paying bills to managing investments—if you become incapacitated. This ensures continuity and prevents your financial world from grinding to a halt during a health crisis.
These documents are not about giving up control. They are about asserting it. You are deliberately choosing your own conservators, ensuring that critical life decisions are made by people who know you and respect your values, not by a stranger appointed by a court.
Planning for long-term care is one of the most significant acts of financial and personal stewardship a person can undertake. It requires confronting uncomfortable questions, but it provides a framework to protect your family and preserve your dignity through life’s most difficult transitions.
The first step is understanding what you have and where it is vulnerable. If you are concerned about how a future health event could impact your family’s assets, I invite you to schedule a confidential review of your current estate structure with our firm.
