Transferring Property From Parent to Child Before Death in New York

Many parents want to pass their home to their children before they die, to help them, to simplify things, or to avoid probate. In New York there are several ways to do it, but they are not equal: some can cost your family thousands in taxes or jeopardize Medicaid eligibility. Here are the main options and their trade-offs.

1. Gift the property outright (gift or quitclaim deed)

The parent signs a deed transferring the home to the child now. It is simple, but it has real downsides. The child takes your original cost basis, so if they sell later they may owe large capital gains taxes. It is a completed gift, so it can trigger a gift tax filing, it exposes the home to the child’s creditors or divorce, and it starts the Medicaid five-year look-back. You also give up control permanently. If you go this route, understand the difference between deed types, see quitclaim deed vs warranty deed and how to transfer a deed in NYC.

2. Add your child to the deed

Adding a child as a joint owner with right of survivorship lets your share pass to them automatically at death. But you are gifting them a share now, with the same basis and creditor exposure concerns, and you cannot easily undo it without their cooperation.

3. Transfer-on-death deed (new in New York)

Since July 2024, New York allows a transfer-on-death deed. You name your child as beneficiary, but keep full control while you are alive, you can sell, mortgage, or revoke it, and the home passes to your child at your death without probate. Because you keep ownership during life, your child generally gets a stepped-up basis, which can dramatically reduce capital gains. For many families this is now the simplest option.

4. Life estate deed

You transfer the remainder now but keep a life estate, the right to live in the home for life. At death it passes to your child with a stepped-up basis. The catch: creating it is a transfer that triggers the Medicaid five-year look-back, and it is difficult to reverse.

5. Living trust

You place the home in a revocable living trust and name your child as beneficiary. You keep control, avoid probate, and preserve the step-up. Trusts are more flexible than a TOD deed when there are several assets or more complex wishes.

6. Leave it in your will

You can simply leave the home to your child in your will. This preserves the step-up and keeps full control, but the home goes through probate, which takes time and money.

The two things that trip people up

Stepped-up basis. Property that passes at your death gets its basis reset to fair market value, often wiping out capital gains for your child. Gifting the home during your life usually loses that benefit. This one difference can be worth tens of thousands of dollars.

Medicaid look-back. If you might need long-term care, transferring your home can make you ineligible for Medicaid for up to five years. Options that keep control (a TOD deed, a properly structured trust) generally handle this better than an outright gift.

So which should you choose?

There is no single right answer, it depends on your assets, your health, your family, and your goals. Because the tax and Medicaid stakes are high, this is a decision to make with a licensed attorney or tax advisor. Once you have decided, we prepare nothing legal for you, but we do the part you will need either way: notarizing and recording your deed correctly. Start at our Estate Planning Center.

This article is general information, not legal, tax, or financial advice. Transferring property has lasting tax and eligibility consequences; consult a licensed attorney and tax advisor before you act.