Funding a Revocable Trust in New York: Which Assets Go In and Which Stay Out

Written by Albert Goodwin, New York estate planning and Surrogate's Court attorney. Tax figures on this page reflect the New York basic exclusion amount for deaths in 2025.

A revocable trust controls only the property that has been transferred into it. New York says so directly: under EPTL 7-1.18, a lifetime trust is valid as to its assets only to the extent those assets have actually been transferred to the trust. Signing the trust agreement is the first step. Retitling deeds, co-op shares, accounts and business interests is the second, and it is where most plans go wrong.

This page covers that second step only: how to fund a New York revocable trust, asset by asset, and which assets you should keep out on purpose. If you are still deciding whether a trust makes sense, start with our page on the benefits of a living trust. For a comparison of trusts with other ways to pass property outside the Surrogate's Court, see how to avoid probate in New York.

Before You Fund: Make Sure the Trust Itself Is Valid Under EPTL 7-1.17

A transfer into a defective trust document can be challenged, so confirm the trust was signed correctly first. EPTL 7-1.17 requires a New York lifetime trust to be:

• In writing: an oral trust of this kind is not valid.
• Signed by the creator: and by at least one trustee, unless the creator is the sole trustee.
• Acknowledged or witnessed: either acknowledged before a notary in the manner required for a deed to be recorded, or signed in front of two witnesses who also sign.

The same statute requires amendments and revocations to be made with the same formalities and delivered to a trustee if the creator is not the sole trustee. A handwritten change in the margin of your trust does not amend it.

If you created the trust in another state before moving to New York, it may still be valid here, but have it reviewed before you deed New York property into it. Title companies and co-op boards will look at the document.

Quick Reference: Fund It or Leave It Out

Deeding a House or Other New York Real Estate Into the Trust

For a one-family house, a multi-family building, a townhouse or vacant land, funding means signing and recording a new deed. The steps are:

• Prepare the deed: title moves from you as an individual to you (and any co-trustee) "as Trustee of the [Name] Revocable Trust dated [date]." A bargain and sale deed with covenants is common. If you own the property with a spouse, both of you sign.
• Record it in the right office: in Manhattan, Brooklyn, Queens and the Bronx, deeds are recorded with the NYC Department of Finance, Office of the City Register, through ACRIS. Staten Island deeds and deeds for property outside the City are recorded with the County Clerk.
• File the transfer tax returns: a transfer to your own revocable trust with no consideration and no change in beneficial ownership is generally exempt from the New York State transfer tax and the NYC Real Property Transfer Tax. The forms must still be filed: Form TP-584 for the State, the NYC-RPT return for property in the City, and the RP-5217NYC (or RP-5217 outside the City) real property transfer report.
• Tell the lender: the federal Garn-St. Germain Act, 12 U.S.C. § 1701j-3(d)(8), generally bars a lender from enforcing a due-on-sale clause on a residential property of fewer than five units when the borrower transfers it to a trust in which the borrower remains a beneficiary and occupant. You still need to give notice, and some lenders ask for a copy of the trust.
• Tell the insurer: ask your homeowner's carrier to add the trustee as a named insured. A policy issued only to you individually may not respond cleanly to a claim against property now owned by a trust.
• Check your title insurance: see the section below on keeping title coverage in force.

STAR, senior and veterans exemptions

New York generally preserves residential property tax benefits when a home is held in a revocable trust for the benefit of the person who lives there. This covers STAR, Enhanced STAR, the senior citizens exemption under RPTL § 467 and the veterans exemptions. Preservation is not automatic in practice. Notify the assessor, or NYC Department of Finance for City property, after the deed records, and keep a copy of the trust available in case the assessor asks to confirm that you are the beneficiary. Homeowners who receive the STAR credit by check from the Department of Taxation and Finance should also confirm the credit continues after the transfer.

Homestead protection

The New York homestead exemption under CPLR § 5206 protects a set amount of equity in a primary residence from most judgment creditors. A revocable trust gives no creditor protection of its own, because you can take the property back at any time. A trust drafted so that you remain the beneficiary and occupant usually keeps the homestead exemption available, but your attorney should confirm this when drafting.

The transfer-on-death deed alternative

Since July 19, 2024, New York has permitted transfer-on-death deeds under Real Property Law § 424. For some owners with one house and simple wishes, a TOD deed can do what funding the trust would do for that property. It does not let a trustee manage the property if you become incapacitated, and it does not apply to co-op shares. Our probate avoidance page compares the two.

Co-op Apartments: Assigning Shares and the Proprietary Lease

Many New York City clients own co-ops, and a co-op is not real estate in the legal sense. You own shares in a cooperative corporation and hold a proprietary lease for your apartment. There is no deed to record. Funding a co-op into a trust means assigning the stock and the lease to the trustee, and that requires the board's consent.

The documents

• Stock power: an assignment of the shares to you as trustee. The managing agent cancels the old stock certificate and issues a new one in the trustee's name.
• Assignment and assumption of proprietary lease: the trustee takes over the lease. Some buildings instead issue a new lease to the trustee.
• Board application or transfer package: most buildings use a shorter form for transfers to the owner's own trust than for a sale to an outsider.
• Transfer tax filings: a transfer of co-op shares is a transfer of an interest in real property for State and City transfer tax purposes. A no-consideration transfer to your own revocable trust is generally exempt, but returns may still be required.

What co-op boards commonly ask for

Boards differ, and the proprietary lease, bylaws and house rules control. Requests we commonly see include:

• A copy of the trust, or the pages identifying the trustees, beneficiaries and trustee powers.
• Confirmation that you will continue to live in the apartment.
• A personal guaranty from you of the trustee's obligations under the lease, so the building can still look to you for maintenance.
• Limits on who may occupy the apartment after your death, often requiring a successor beneficiary to apply to the board before moving in or receiving the shares.
• Payment of the managing agent's processing fee and the building's legal fees for reviewing the transfer.

Some buildings have a written policy on trust ownership. Others decide case by case. A few refuse trust ownership altogether. Ask the managing agent for the building's policy before you sign anything.

Flip taxes and transfer fees

A flip tax is a fee the co-op charges on a transfer of shares. Many offering plans and bylaws exclude transfers to the shareholder's own trust or to family members, but not all do. Read the specific provision. If the language is unclear, ask the board for a written confirmation that no flip tax applies before the transfer.

If you have a co-op loan

Co-op financing is secured by the shares and lease, and the lender usually has a recognition agreement with the co-op. Notify the lender. Garn-St. Germain protections are generally understood to cover a co-op unit occupied by the borrower, but the lender may need to sign off on the new stock certificate.

If the board refuses

If the board will not consent, the shares stay in your individual name. Options at that point include:

• Asking what conditions would satisfy the board, such as a guaranty or a revised trust provision about who may occupy the unit after your death.
• Leaving the co-op out of the trust and relying on the pour-over will under EPTL 3-3.7. The apartment then passes through the Surrogate's Court before reaching the trust.
• Planning for the post-death transfer, since your executor or trustee will need board approval for any beneficiary who wants to keep the apartment. See our page on access to an apartment after death.

Condominium Units: The Right-of-First-Refusal Waiver

A condo unit is real property, so it is funded with a deed recorded the same way as a house. The extra step comes from the condominium's bylaws, which usually give the board a right of first refusal on transfers. Transfers to the owner's own trust are often excluded, but the title company and your attorney will want a written waiver or a letter from the managing agent confirming the right does not apply. Request it before recording. Some condo boards also ask for a copy of the trust or a certification of trustees.

Out-of-State Property and Title Insurance

A vacation home in Florida, New Jersey or Connecticut held in your own name will require an ancillary probate proceeding in that state after your death, in addition to the New York proceeding. Funding it into the New York trust avoids that. The deed must meet the recording and transfer tax rules of the state where the property sits, so use a lawyer or title company licensed there.

For both New York and out-of-state property, ask whether your existing owner's title insurance policy continues to protect the trustee after the transfer. Newer policy forms generally treat the trustee of a trust you set up for estate planning as an insured, but older policies may not. If coverage is unclear, the title company that issued the policy can usually confirm it in writing or issue an endorsement.

Bank and Brokerage Accounts

Retitling deposit and investment accounts is usually the simplest funding step. You generally provide the institution's account-change form, the trust's taxpayer identification number (your own Social Security number for a typical grantor revocable trust while you are alive) and proof of the trust.

What New York institutions accept as proof of the trust

Many states have adopted the Uniform Trust Code's certification-of-trust statute, which requires third parties to accept a short certification instead of the full trust. New York has not adopted that statute. In practice:

• Most large banks and brokerages have their own trust certification form, which the trustee signs and often has notarized. Using the institution's form is usually fastest.
• Many institutions also accept an attorney-prepared certification signed by the trustee, attaching the first page of the trust, the pages naming the trustees, the trustee powers section and the signature and acknowledgment pages.
• Some institutions, and many title companies when trust-owned real estate is later sold or refinanced, ask for the full trust. Because New York has no statute forcing them to accept less, you may have to provide it.

For a CD, retitling may require breaking and reissuing it. Ask whether the bank will retitle without an early withdrawal penalty. For accounts you plan to keep outside the trust, a payable-on-death or transfer-on-death designation naming the trust is often enough.

Retirement Accounts Stay Out

Do not retitle an IRA, 401(k) or 403(b) into a revocable trust. A change of owner on a qualified retirement account is treated as a full distribution, making the balance taxable as ordinary income in that year. Instead, name the trust (or individuals) as beneficiary. The beneficiary designation controls who receives the account, regardless of the trust or the will.

If you name a trust as beneficiary, the trust's terms matter. Under the SECURE Act and the final IRS regulations under Internal Revenue Code § 401(a)(9), most non-spouse beneficiaries must empty an inherited account within 10 years. If the account owner had already reached the required beginning date, annual distributions may also be required during those 10 years. A trust must qualify as a "see-through" trust, drafted as a conduit or accumulation trust, to be treated as a designated beneficiary. That is a drafting decision for your attorney, not something to handle with a standard beneficiary form.

Life Insurance and Annuities

You can name a revocable trust as beneficiary of a life insurance policy. That is often sensible when minor children or staggered distributions are involved, because the death benefit is paid to the trustee and administered under the trust's terms. Transferring ownership of the policy into the revocable trust does nothing for taxes. Because you keep the power to revoke, the death benefit stays in your taxable estate.

The estate tax tool for life insurance is an irrevocable life insurance trust (ILIT), which keeps the death benefit out of your estate but requires you to give up control permanently. Because New York's estate tax exclusion is far below the federal one, an ILIT can matter for New York families who owe no federal estate tax. Annuities should also stay in your name, with the trust named as beneficiary. Assigning an annuity can trigger surrender charges and accelerate taxable gain.

New York Estate Tax: Funding Does Not Reduce It

Everything in a revocable trust remains in your New York taxable estate, because you kept control. Funding the trust avoids probate. It does not reduce estate tax. That matters because New York's exclusion is low and its tax has a cliff.

For deaths in 2025, the New York basic exclusion amount is $7,160,000. The amount is indexed for inflation and changes each January 1. Check the New York Department of Taxation and Finance estate tax page for the figure that applies to the year of death.

Under New York Tax Law § 952, the credit that shelters the exclusion amount phases out quickly once the taxable estate exceeds the exclusion, and disappears entirely once the estate exceeds 105% of it. A simplified illustration using the 2025 figure, before deductions:

• Estate of $7,160,000 (100%): no New York estate tax.
• Estate of about $7,446,000 (104%): part of the credit is lost. The tax owed is disproportionate to the roughly $286,000 overage, because the phase-out produces a marginal rate well above the published rates.
• Estate of about $7,590,000 (106%): the credit is gone. Tax is computed on the entire estate under the New York rate table, which comes to roughly $717,000.

An estate that grows by a few hundred thousand dollars can move from no tax to a six-figure tax. Planning for the cliff happens through credit-shelter provisions in the trust, lifetime gifts, charitable bequests designed to bring the estate under 105%, or irrevocable trusts, not through funding the revocable trust. See our page on advanced New York estate planning techniques.

Medicaid: A Revocable Trust Gives No Protection

Clients sometimes expect a living trust to protect their home or savings from nursing home costs. It does not. Under federal Medicaid law, 42 U.S.C. § 1396p(d)(3)(A), the assets of a revocable trust are treated as available to the person who created it, and New York follows that rule. A home or account moved into a revocable trust is counted exactly as if you still owned it outright.

The New York planning tool for Medicaid is usually an irrevocable Medicaid asset protection trust, which you cannot revoke and from which you generally cannot take principal. Transfers into it are subject to the 60-month look-back for nursing home Medicaid. If long-term care is a concern, raise it before you fund the revocable trust, because the right answer may be to put certain assets into a different kind of trust.

Businesses, S-Corp Stock and Other Special Assets

LLC and partnership interests: these usually can be assigned to your revocable trust. Check the operating or partnership agreement first. Transfer restrictions, consent requirements and buy-sell clauses may require approval from the other members, and an assignment made without it may transfer only economic rights.

S-corporation stock: a grantor trust is an eligible S-corporation shareholder during your life under Internal Revenue Code § 1361(c)(2)(A)(i), and for two years after death under § 1361(c)(2)(A)(ii). After that, the trust or its sub-trusts must qualify as a Qualified Subchapter S Trust or an Electing Small Business Trust, with timely elections. An inadvertent termination of the S election is expensive to fix, so this belongs in the drafting.

Vehicles: the New York DMV will retitle a vehicle into a trust, but for an ordinary car it is rarely worth the effort. Under EPTL 5-3.1, a surviving spouse is entitled to one motor vehicle up to $25,000 in value outside the will, and small estates have simpler transfer options. Collector and high-value vehicles are a different calculation.

Tangible personal property: art, jewelry, furniture and collectibles have no title document, so they are funded by a written assignment of personal property to the trustee. For valuable items, attach a schedule describing them.

Cryptocurrency and digital assets: a trust can hold digital assets, and EPTL Article 13-A governs a fiduciary's access to digital accounts. The practical risk is access to private keys and exchange logins. If your trustee cannot reach them, the asset may be lost. Keep access instructions secure and separate from the trust document.

Assets You Forget to Fund

A pour-over will, authorized by EPTL 3-3.7, directs anything left in your individual name at death into the trust. Those assets still go through the Surrogate's Court first. The pour-over will catches forgotten assets but does not keep them out of probate. Review your funding once a year and whenever you buy property, open an account or refinance. Refinancing deserves particular attention: some lenders require the property to be deeded out of the trust to close, and the deed back into the trust is often forgotten afterward. For what probate of leftover assets looks like, see our sample NYC probate timeline.

Related Trust Resources

• Benefits of a living trust: whether a trust is the right tool for you.
• Avoiding probate in New York: trusts compared with TOD deeds, joint ownership and beneficiary designations.
• Working with a NYC trust attorney: how a trust engagement works.
• Are trusts public record?: privacy compared with a will.
• Beneficiaries' rights to trust information: what a trustee must share after the creator's death.

Sources

• New York Estates, Powers and Trusts Law § 7-1.17 (execution, amendment and revocation of lifetime trusts) and § 7-1.18 (validity of lifetime trusts as to transferred assets).
• EPTL § 3-3.7 (dispositions to trustees of lifetime trusts) and § 5-3.1 (exempt property for a surviving spouse).
• EPTL Article 13-A (Administration of Digital Assets).
• New York Real Property Law § 424 (transfer-on-death deeds).
• New York Real Property Tax Law § 425 (STAR) and § 467 (senior citizens exemption).
• New York Civil Practice Law and Rules § 5206 (homestead exemption).
• New York Tax Law § 952 (estate tax computation) and the NYS Department of Taxation and Finance estate tax guidance.
• Garn-St. Germain Depository Institutions Act, 12 U.S.C. § 1701j-3.
• Internal Revenue Code § 401(a)(9) and the IRS required minimum distribution FAQs.
• Internal Revenue Code § 1361(c)(2), (d) and (e) (S-corporation trust shareholders).
• 42 U.S.C. § 1396p(d)(3) (treatment of trusts for Medicaid eligibility).
• NYC Department of Finance ACRIS (recording deeds in Manhattan, Brooklyn, Queens and the Bronx).

Review Your Funding Plan With a New York Estate Attorney

The chart above cannot see your co-op's trust policy, your business agreements, your beneficiary designations or how close your estate sits to the New York cliff. Albert Goodwin is a New York attorney who handles estate planning and Surrogate's Court matters in Manhattan, Brooklyn, Queens, the Bronx, Staten Island, Long Island and Westchester. To review which assets should go into your trust and how to transfer them, call 212-233-1233 or email [email protected]. Read more about Albert Goodwin.

This article is general information about New York law and is not legal or tax advice. Reading it does not create an attorney-client relationship. Statutes, exclusion amounts and co-op policies change. Consult a licensed New York attorney about your situation.