Can we transfer the house into a trust now, and what happens if we need care within the five‑year lookback? – South Carolina

Short Answer

Yes, in South Carolina a house can often be transferred into a trust now, but the type of trust matters. If the transfer is a gift or goes into an irrevocable trust and long-term care Medicaid is needed within five years, the transfer can trigger a penalty period that delays Medicaid coverage for nursing home care. A revocable living trust usually avoids probate planning issues, but it generally does not shield the house from Medicaid transfer rules or estate recovery concerns in the same way an irrevocable planning strategy may.

Understanding the Problem

In South Carolina estate planning, the question is whether a married couple can deed a mortgaged home into a trust now to help with long-term care planning, and what the result is if either spouse later needs Medicaid-funded nursing home care before five years have passed. The main decision point is not whether a trust exists, but whether the transfer counts as a protected planning step or a transfer that creates a Medicaid penalty period. The answer turns on the trust terms, who keeps control, and when care is needed.

Apply the Law

South Carolina follows the Medicaid transfer-of-assets rules that look back at transfers for less than fair market value made during the 60 months before a long-term care Medicaid application. In practice, that means a transfer of a home into an irrevocable trust may help with asset protection if enough time passes, but it can create a penalty if nursing home Medicaid is needed during the five-year window. The penalty is based on the uncompensated value transferred and does not start running until the applicant is otherwise eligible for Medicaid and has applied. South Carolina also allows estate recovery in many cases after age 55 for certain Medicaid benefits, subject to limits such as a surviving spouse and certain children.

A revocable trust works differently. If the person creating the trust keeps full control and can take the property back, the home is usually still treated as available for Medicaid planning purposes. By contrast, an irrevocable trust may remove the home from the countable estate for some planning purposes, but only if it is structured carefully and the transfer survives the lookback period. The main agency involved in Medicaid eligibility is the South Carolina Department of Health and Human Services, and nursing-home-level care must also be established before benefits begin.

Key Requirements

Type of trust: A revocable trust usually keeps the house under the owner’s control, while an irrevocable trust may offer stronger long-term protection but limits control and flexibility.
60-month lookback: South Carolina reviews transfers made within the five years before a Medicaid long-term care application to see whether property was given away for less than fair market value.
Penalty timing: A transfer penalty does not simply expire with time alone; it generally starts only after the applicant files, meets the medical level of care, and is otherwise financially eligible except for the transfer.

What the Statutes Say

S.C. Code Ann. § 44-6-720 (Undue Hardship Waiver) – sets requirements for an undue-hardship waiver and states that, for that subsection, the maximum length of ineligibility is extended to sixty months from the date of an improper transfer.
S.C. Code Ann. § 44-6-710 (Trusts and Undue Hardship Cases) – provides that certain applications involving a Medicaid qualifying trust or an improper transfer of resources are treated as undue-hardship cases if Section 44-6-720 is satisfied.
S.C. Code Ann. § 43-7-460 (Medicaid Estate Recovery) – allows the state to seek recovery from certain estates after death, usually after the death of a surviving spouse and subject to hardship and family protections.

Analysis

Apply the Rule to the Facts: Here, the couple owns a primary residence with a mortgage and wants the home to pass to one child while also planning for possible long-term care. If they deed the house into an irrevocable trust now and one spouse needs nursing home Medicaid within five years, South Carolina can treat that transfer as an uncompensated transfer unless an exception applies. If they use a revocable living trust instead, the trust may still help with probate avoidance and management during incapacity, but it usually does not solve the Medicaid lookback problem because the owners keep control.

The mortgage does not prevent a transfer into trust, but it does add practical issues. The deed and trust terms must be coordinated with the lender, title rules, and insurance, and the transfer should be reviewed so it does not accidentally create due-on-sale, homestead, or occupancy problems. The IRA also needs separate planning because it is not retitled into the same kind of trust in the same way a house is, and beneficiary designations often matter more than the will.

South Carolina practice guidance also points to two common planning realities. First, transfers within the lookback are aggregated, and partial-month penalties can apply rather than only whole months. Second, the penalty period usually does not begin on the transfer date; it typically begins only when the person has applied and is otherwise eligible except for the transfer, which can make crisis planning harder than families expect.

Process & Timing

Who files: the homeowner or the homeowner’s agent under a valid power of attorney. Where: for the trust and deed, the county Register of Deeds or Clerk of Court land records office in the South Carolina county where the property is located; for Medicaid long-term care benefits, the South Carolina Department of Health and Human Services. What: a signed trust agreement if used, a deed transferring the home, and later a Medicaid application with financial records and transfer documentation. When: the trust transfer should be completed before a care crisis if asset-protection planning is the goal, and the key lookback period is 60 months before the Medicaid application.
Next, the couple should review whether the trust is revocable or irrevocable, whether the deed reserves any rights, and whether the existing powers of attorney authorize later Medicaid and asset-planning steps. If care is needed during the five-year window, the Medicaid application will usually require full disclosure of the transfer and supporting records.
Final step and expected outcome: the deed is recorded, the trust becomes part of the estate plan, and if Medicaid is later needed, SCDHHS decides whether the transfer causes a penalty period, whether an exception applies, or whether other planning options remain available.

Exceptions & Pitfalls

Some transfers do not trigger the same penalty, including certain transfers to a spouse, a disabled child, or in limited home-transfer situations involving a qualifying sibling or caregiving child.
A common mistake is assuming any trust protects the home. A revocable trust often helps with probate and incapacity planning, but it usually does not remove the asset from Medicaid review.
Another mistake is waiting until care is imminent. Because the penalty period may not start until the applicant is otherwise eligible and has applied, late transfers can create a gap with no Medicaid coverage during the penalty period.
Families also overlook estate recovery. Even if the home is exempt during life in some situations, South Carolina may still pursue recovery from the estate later under its recovery statute. For a broader discussion, see how to protect a home in South Carolina if a spouse needs long-term care and irrevocable trust vs. deeding a house to a child with a retained interest in South Carolina.

Conclusion

Yes, a South Carolina couple can often transfer a house into a trust now, but whether that helps with long-term care planning depends mainly on whether the trust is revocable or irrevocable. The key threshold is the five-year Medicaid lookback: if nursing home Medicaid is needed before 60 months pass, the transfer may cause a penalty period. The next step is to review and sign the deed and trust plan before any Medicaid application is filed within that 60-month window.

Talk to a Estate Planning Attorney

If a family is weighing whether to deed a South Carolina home into a trust while planning for possible long-term care, our firm has experienced attorneys who can help explain the options, the five-year lookback, and how the trust, deed, powers of attorney, and beneficiary designations should work together.

Disclaimer: This article provides general information about South 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 South Carolina attorney.