A trust is one of the strongest tools for protecting your assets, planning for long-term care and making sure your family receives what you want them to have. At the Law Offices of Albert Goodwin we draft trusts that follow New York law and match each client’s goals, and we walk you through the whole process so that you understand your choices, what each option means, and how to set up a trust that works for you.
How the Trust Drafting Process Begins
We start with a simple conversation about what you want to achieve: which assets you want to protect, who you want to benefit, and whether privacy, avoiding probate, tax planning or Medicaid planning matters most to you. Once we understand your goals, we help you choose the type of trust that makes sense for your situation and explain the legal and financial effects in plain terms.
Deciding Between a Revocable and an Irrevocable Trust
One of the first decisions you will make is whether your trust should be revocable or irrevocable. The two work very differently.
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Revocable Trusts
A revocable living trust lets you stay in full control. You can change it, add assets or cancel it whenever you want. Because you still control the trust, the IRS treats the assets as your own: you are responsible for the taxes, and your heirs usually receive a step-up in basis when they inherit, which can lower capital gains taxes if they later sell. A revocable trust does not protect assets for Medicaid, because the assets are still considered yours. People choose a revocable trust when they want to avoid probate, keep things private and make it easier for someone to manage their assets if they become ill.
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Irrevocable Trusts
An irrevocable trust is much stricter. Once it is created, you usually cannot change it, take back assets or end it. Because you give up control, the assets are no longer legally yours. That is what makes it useful for Medicaid planning, when the trust is written correctly and funded more than five years before applying for nursing home Medicaid, and it can also provide some protection from creditors. Whether the assets receive a step-up in basis at death depends on how the trust is written and whether the assets are included in your taxable estate, and some irrevocable trusts require separate tax reporting. People usually choose an irrevocable trust for long-term care planning, Medicaid eligibility or stronger asset protection.
| Question | Revocable trust | Irrevocable trust |
|---|---|---|
| Can you change or cancel it? | Yes, at any time. | Usually not. |
| Who owns the assets? | Still you, for tax and Medicaid purposes. | The trust; the assets are no longer legally yours. |
| Medicaid protection? | None. | Yes, if drafted correctly and funded more than five years before applying. |
| Step-up in basis at death? | Usually yes. | Depends on the drafting and whether the assets are in your taxable estate. |
| Typical reason to choose it | Avoiding probate, privacy, management during illness. | Long-term care planning, Medicaid eligibility, asset protection. |
We go over these differences during the consultation so that you understand what you gain and what you give up with each type. For a fuller comparison, see living trust vs. revocable trust.
Understanding the Consequences of Each Type of Trust
A big part of our job is helping you understand how each trust will affect your future: how taxes work while you are alive and after you pass away, whether there will be a step-up in basis, how Medicaid will view the trust, how much control you keep, how your beneficiaries will receive assets, and what the trustee will have to do. That is what lets you make the choice with confidence.
Drafting the Trust Document
After you choose the type of trust, we prepare a trust document that fits your needs. The document names the trustee and the beneficiaries and sets out how the assets are to be managed, when and how distributions happen, what powers the trustee has, how the trust is taxed and how long it lasts. New York has strict rules for how trusts must be written, and we make sure yours follows them and avoids the mistakes commonly found in online templates.
Funding the Trust
A trust only works if it is properly funded, and this step is often overlooked. Funding means transferring assets into the trust: real estate, bank accounts, investment accounts, life insurance in some cases, business interests and certain personal property. We guide you through each transfer and work with banks, financial companies and title companies when needed. Without proper funding, a trust cannot achieve its purpose, whether that purpose is Medicaid protection, avoiding probate, creditor protection or tax planning.
What Happens With an Irrevocable Trust After It Is Created
If you choose an irrevocable trust, the trustee, not you, controls the trust assets from then on, and every distribution must follow the rules written in the trust. If the trust is used for Medicaid planning, withdrawals must be handled very carefully to avoid penalties. We stay available to answer questions and help families manage the trust correctly as life changes.
Why Work With a New York Trust Attorney
Trusts must be written carefully and must follow New York law. Creating a trust on your own or from a generic online form can lead to tax problems, loss of Medicaid eligibility, delays in settling your estate, or assets that are not protected the way you hoped. To discuss a revocable or irrevocable trust, call us at 212-233-1233 or email [email protected].
