It is the most common piece of kitchen-table planning in New York. A parent is worried about a nursing home taking the house, so they add a son or daughter to the deed and assume the problem is solved.
It usually is not. Adding a child to the deed puts the largest tax benefit your family has at risk, leaves the part of the house you kept exposed to exactly what you were trying to avoid, and can still cost you the senior school tax exemption if that child ever moves in. Worse, whether you lose a little or a lot comes down to a single line of wording on the deed — and New York's default setting is the one that costs you more.
New York gives senior homeowners a larger school tax exemption than everyone else, and this is the first thing most people are warned about when they raise the deed question. The warning as it is usually given is now out of date.
Until this year, every owner of the property had to be 65 or older to qualify for Enhanced STAR, with a narrow exception where the only owners were a married couple or only siblings. On those rules, adding a son or daughter in their forties broke the age test the day the deed was signed.
That changed. Beginning in 2026, the age test applies to resident owners only. The Department of Taxation and Finance states that only one resident owner of the property, regardless of the relationship of the owners, must be at least 65. Income eligibility moved with it, and is now based on the income of only resident owners and their spouses who reside at the property. The income limit for the 2026 benefit year is $110,750.
So a child who goes on the deed but does not live in the house no longer costs you the exemption. The parent living there is still a resident owner over 65, and a non-resident owner's income is not counted at all.
The exposure moved rather than disappeared. If that child lives in the house, or moves in later, they become a resident owner and their income counts toward the $110,750. An adult child still working can carry the household over that limit on their own, and the property falls back to Basic STAR. Nobody has to file anything for that to happen. It happens because who lives there changed.
Nobody sends you a letter explaining this. It shows up as a larger school tax bill the following year.
The step-up in basis is the quietest and most valuable thing in estate planning. When someone inherits property, the tax basis resets to the value on the date of death. Every dollar of appreciation that built up during the owner's lifetime simply disappears for capital gains purposes.
On a Queens house bought in 1985 for $90,000 and worth $900,000 today, that is $810,000 of gain that a beneficiary never pays tax on. Hand the same house over during your lifetime and the child takes your original purchase price as their basis instead. Sell it, and the gain is theirs to pay tax on.
When you add a child to the deed rather than giving them the whole house, the answer sits somewhere between those two outcomes. Where exactly depends on the deed.
Under EPTL 6-2.2(a), a transfer of property to two or more people in New York creates a tenancy in common unless the deed expressly declares it to be a joint tenancy. That is the default. It applies unless somebody deliberately writes otherwise.
The difference matters enormously here.
If the deed creates a tenancy in common, which is what happens when nobody says otherwise, the parent owns a defined share and the child owns a defined share. Only the parent's share is included in their estate at death, and only that share is stepped up. The child's share keeps the parent's original purchase price as its basis, and the gain attached to it stays taxable.
If the deed expressly creates a joint tenancy with right of survivorship, federal law takes a different view. Under IRC § 2040(a), the full value of jointly held property is included in the deceased owner's estate except to the extent the survivor can prove they paid for their share. A child who was simply added to the deed and contributed nothing cannot prove any contribution — so the whole property is included, and the whole property is stepped up.
So the version most families end up with by accident is the version that gives up part of the benefit. The version that preserves it has to be written deliberately, and most deeds prepared without advice do not say it.
This is the part that undoes the whole point of the exercise. If you are still on the deed, you still own part of the house, and the share you kept is still yours.
New York recovers what it has paid by filing a claim against the estate after death. Recovery applies where the recipient was 55 or older, or was permanently institutionalized, and the claim is made in Surrogate's Court against the assets that pass through the estate. A lien may also be placed on real property the recipient held.
Which brings the deed wording back a second time. A tenancy in common share passes through the estate when the owner dies, so it has to be probated and it is within reach of a claim. A joint tenancy share with right of survivorship passes automatically to the surviving owner and does not form part of the probate estate at all.
One line of drafting, three separate consequences, and the default setting is the wrong one on all three counts.
A properly drafted irrevocable trust solves the three problems together rather than trading one for another.
The trust is drafted so the senior keeps the right to live in the property for life. New York treats a trust beneficiary who transferred the home to the trustees and still lives there as the homeowner for STAR purposes. The exemption survives the transfer.
The trust is structured so the property is still included in the grantor's estate for tax purposes at death. That inclusion is what produces the step-up, and it applies to the entire property rather than a fraction of it. For 2026 the New York estate tax exclusion is $7,350,000, so for most families inclusion costs nothing and the full step-up is preserved.
Once the property is in an irrevocable trust it is no longer the grantor's resource at all. There is no retained share left sitting in the grantor's name, which is the whole difference between this and putting a child on the deed.
For nursing home care, New York examines the five years before the application. Anything given away inside that window is reviewed, and a transfer found there produces a penalty period during which Medicaid will not pay and the family does. What catches people is which end the five years are counted from. The window runs backwards from the month care begins, not forwards from the day the deed was signed. Sign a deed today and enter a nursing home in four years, and that deed is still inside the window.
Home care is the exception, for now. New York legislated a two-and-a-half year review for community Medicaid years ago and has never switched it on. No start date has been announced. As things stand, a transfer made this month faces no look-back at all on the home care side.
That gap has been open for several years and it will close with notice measured in months rather than years. Families who expect to need care at home should treat the current position as temporary.
Not on the 2026 rules, provided the child does not live in the house. Since this year only one resident owner needs to be 65 or older, and only the income of resident owners and their resident spouses counts toward the $110,750 limit. A great deal of advice still in circulation describes the old rule, under which every owner had to be 65. If the child lives there, or moves in later, their income does count and the exemption can be lost that way.
You cannot do it on your own. Once their name is on the deed they are an owner, and removing them requires their signature. If they have since married, been sued, or run into tax trouble, their interest may already be entangled with somebody else's claim.
It reaches their share of it, yes. A co-owner's interest in real property is an asset. It can be reached by their creditors and it forms part of the picture in their divorce. This is the risk families find hardest to believe until it happens.
It is still worth planning. The look-back applies to nursing home care, and home care does not currently have one in force. There are also exemptions for transfers to a spouse, to a disabled child, and to a caregiver child who meets the statutory conditions. The worst outcome is assuming it is too late and doing nothing.
They are not the same. A life estate keeps a measurable interest in your name, and that interest has consequences of its own for control, for sale, and for what happens at death. A trust and a life estate solve overlapping problems differently, and which one fits depends on the family.
At least three months in a straightforward matter. That assumes the heirs are known, all adults, and all prepared to sign. Anything that breaks one of those assumptions — a cousin nobody can trace, a sibling who objects, a dispute about the bond — and three months stops being the answer.
Two questions settle most of it. What does the deed actually say, and when was it signed? The first tells you which version of the problem you have, and the second tells you where you stand with the look-back. Both are answerable from the recorded deed in an afternoon.
It is worth finding out. The fix is usually easier before somebody needs care than after.
Speak with a New York estate attorney. The consultation is free and it is with an attorney, not an intake desk. Call (347) 766-2685.
Law Offices of Roman Aminov
147-17 Union Tpke, Queens, NY 11367
(347) 766-2685
This article is general information about New York law and is not legal advice. Thresholds and Medicaid figures change annually and those stated here are current for 2026. Every family and every deed is different. Prior results do not guarantee a similar outcome.
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