Dec282025
Estate Planning Q&A Series

Can a home be transferred into a trust to help with Medicaid planning, and what are the risks? – North Carolina

Short Answer

Yes. In North Carolina, a home can be transferred into certain types of trusts as part of Medicaid planning, but the transfer can trigger a Medicaid “transfer penalty” if it occurs within the lookback period and it can create other practical risks (loss of control, problems selling or refinancing, and family disputes). Also, moving a home into a typical revocable living trust usually does not protect it for Medicaid eligibility, and a trust does not automatically defeat Medicaid estate recovery.

Understanding the Problem

In North Carolina, can a hospitalized older adult who may soon enter assisted living move a home into a trust to help qualify for Medicaid long-term care benefits, and what risks come with that choice? If an agent is acting under a durable power of attorney, can the agent sign the deed and trust documents, and what timing issues matter if long-term care may be needed soon?

Apply the Law

North Carolina Medicaid follows federal transfer-of-assets rules. When an applicant (or the applicant’s spouse) transfers an asset for less than fair market value on or after the Medicaid lookback date, Medicaid can impose a period of ineligibility for certain long-term care services. The home counts as an “asset” for transfer-penalty purposes even when it is treated differently for monthly eligibility rules. Separately, North Carolina runs a Medicaid Estate Recovery Plan that allows the State to seek repayment from a deceased recipient’s “estate,” and for certain recipients the definition of “estate” can reach assets that pass by survivorship or through a living trust arrangement.

Key Requirements

  • Correct trust type and retained rights: A typical revocable living trust usually leaves the home effectively available to the person who created it, which can keep the home tied to the person for Medicaid purposes. Medicaid planning trusts often aim to limit the person’s ability to revoke the trust or demand the property back, which changes control and has real-world consequences.
  • Timing (lookback and penalty): If the home is moved into a trust for less than fair market value within the lookback window, Medicaid can impose a penalty period that delays coverage for nursing facility services and certain home- and community-based services.
  • Authority to transfer real property: If someone other than the homeowner signs the deed (for example, an agent under a power of attorney), North Carolina requires recording the power of attorney (or a certified copy) in the Register of Deeds before or in connection with the real property transfer.

What the Statutes Say

Analysis

Apply the Rule to the Facts: Here, the goal is to shelter a home and other assets from Medicaid reimbursement or estate recovery as a relative transitions from hospitalization to assisted living. If the home is transferred into a trust for less than fair market value and a Medicaid long-term care application follows within the lookback period, the county department of social services can treat that transfer as a penalized transfer and delay coverage for certain long-term care services. If the transfer is signed by an agent under a durable power of attorney, the power of attorney generally needs to be recorded with the Register of Deeds in the correct county as part of the conveyance process.

Process & Timing

  1. Who files: The homeowner (or an authorized agent acting under a properly recorded power of attorney). Where: The deed is recorded with the Register of Deeds in the North Carolina county where the property is located, and Medicaid eligibility is handled through the county department of social services. What: A new or amended trust agreement (as appropriate) and a recorded deed transferring the home to the trust (or to trustees), plus supporting documentation for the Medicaid application. When: Before a Medicaid long-term care application is submitted if the plan depends on a completed transfer; timing is critical because transfers within the lookback period can create a penalty.
  2. Eligibility review: the county department of social services reviews financial records and transfers. A home transfer to a trust may require providing the deed, trust terms, and an explanation of what was received in exchange (if anything).
  3. If a penalty is assessed: the county must send notice, and the applicant can request an undue hardship waiver if the statutory criteria are met.

Exceptions & Pitfalls

  • Transferring to a “living trust” may not accomplish the goal: Many people use revocable living trusts for probate avoidance, but those trusts often do not reduce Medicaid countability because the creator typically keeps the power to revoke and reclaim the home.
  • Lookback and penalty risk: A late-stage transfer to a trust can delay Medicaid coverage at the exact time assisted living or nursing facility care is needed. That can create a planning gap where private payment is still required.
  • Estate recovery may still reach the home in some cases: North Carolina’s recovery rules can focus on the recipient’s “estate,” and for certain recipients the definition can extend beyond the probate estate to include interests passing through arrangements such as a living trust or survivorship.
  • Power of attorney limitations and deed-signing problems: Even with a durable power of attorney, third parties (including title companies and registers) often scrutinize authority for gifting and trust funding. Recording requirements can also be missed, which can stall transactions.
  • Co-ownership complications: If the caregiver child is already a co-owner, changing title again can create disputes over who owns what, expose the property to the co-owner’s creditors, and complicate a later sale or refinance.
  • Loss of control and family conflict: Medicaid-oriented trusts often require giving up direct control over sale proceeds. That can create practical problems if the home must be sold to pay for care or to move closer to family.

Conclusion

In North Carolina, transferring a home into a trust can be part of Medicaid planning, but the key risk is a transfer-of-assets penalty if the transfer happens within the Medicaid lookback period. A standard revocable living trust usually does not protect a home for Medicaid eligibility and does not automatically prevent estate recovery. If an agent signs the deed under a power of attorney, the power of attorney should be recorded with the Register of Deeds as part of the conveyance process.

Talk to a Estate Planning Attorney

If a family is dealing with a likely transition to assisted living or nursing care and is considering transferring a home into a trust for Medicaid planning, our firm has experienced attorneys who can help clarify options, paperwork, and timing risks. Call us today at (919) 341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Estate Planning Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.