To preserve your home from the devastating costs of nursing home care, you can transfer it to your children with either a life estate deed or a deed to an irrevocable living trust. With both the NY life estate deed and the irrevocable living trust :

You will avoid probate.
You can preserve your home from nursing home and home care Medicaid costs beginning five years from the transfer.
Your home property will still qualify for any property tax exemptions such as veterans and senior citizens exemptions that were available prior to the transfer as long as you continue to reside in your home.
Capital gains when your children sell the home will be calculated on a stepped-up basis which is the value at the date of your death rather than your original cost basis .
Social Services cannot require you sell your life estate interest or to rent out your home while you are on Medicaid.
You have the right to live in your home for the rest of your life. During your lifetime your children can’t make you move out.
Your home will not be subject to Medicaid estate recovery when you die because it avoids probate.

With the irrevocable living trust, your home is deeded to the trustee(s), instead of directly to your children and thus, avoids these disadvantages of the life estate deed:

If you rent out your home while you are on Medicaid, any net rental income that you receive is counted in determining your eligibility for Medicaid.
If your child files for bankruptcy, a large sum of money would have to be paid to the bankruptcy trustee.
If your child dies, his or her remainder share may pass through his estate to his spouse or children.
Judgments against your child would be liens against your house.
If you decide to sell your home and buy another home, you would have to start all over again with the five-year look-back period.
If you sell your home while you are on Medicaid, part of the sale proceeds will be a countable resource for determining Medicaid eligibility.
You will lose your $250,000 ($500,000 joint return) exclusion on the capital gains from the sale of your primary residence.

Another advantage of the irrevocable living trust is that other assets, such as bank accounts and certain investment accounts that you wish to preserve, can also be added to it.

For advice from New York Elder Law Attorney Robert Friedman on preserving your home from nursing home costs, complete this Medicaid Planning Form and call 716.542.5444.