This study assesses patterns of caregiving, death, and recovery after incident disability in older adults. We used the Health and Retirement Study to follow of a cohort of adults age ≥65 years in the United States with incident disability in activities of daily living (ADLs) or instrumental activities of daily living (IADLs; n = 8,713). Rates of care and function state were assessed biennially: deceased, nursing home dwelling, at home with paid help, at home with both paid and unpaid help, at home with unpaid help, at home with no assistance and recovered. In the 2 years after incident disability, 22.1% recovered and 46.8% died. Transitions between care and function states occurred frequently, with more than 20% of the cohort living at home with no assistance despite disability at least once. This study demonstrates the high levels of care and function state fluctuation and unmet needs after functional disability.