How Estate Planning Works in New York City

Last updated: June 2024. Written by Albert Goodwin, Esq., a New York estate and probate attorney admitted in New York, with offices serving Manhattan, Brooklyn, Queens, and the surrounding counties. This article is general legal information about New York estate planning, not legal advice for your specific situation.

Estate planning in New York is the process of deciding — in advance and in writing — who will manage your affairs if you become incapacitated, who will receive your property after your death, and how to reduce delay, cost, and tax along the way. New York has its own statutes that govern these documents: principally the Estate, Powers and Trusts Law (EPTL) and the Surrogate's Court Procedure Act (SCPA). This page is a plain-English overview that links you to deeper guides on each topic.

The core estate planning documents in New York

Most New York estate plans are built from four documents. Which ones you need depends on your assets, your family, and your goals — not everyone needs every document.

• Last Will and Testament. A will directs who receives your probate assets and names an executor. Under EPTL § 3-2.1, a New York will must be signed at the end by the testator and witnessed by at least two people who sign within 30 days of one another. A will can also nominate a guardian for minor children (SCPA Article 17). Note that a will does not avoid probate — it is the document the Surrogate's Court actually probates.
• Trust. A trust is a legal arrangement in which a trustee holds and manages property for beneficiaries under EPTL Article 7. Trusts can be revocable (changeable during your life, useful mainly to avoid probate and plan for incapacity) or irrevocable (giving up control in exchange for asset protection or Medicaid/tax benefits). The differences matter enormously — see Benefits of a Living Trust and What Assets Can and Cannot Go Into a Revocable Trust.
• Durable Power of Attorney. Authorized under General Obligations Law § 5-1501 et seq., this names an agent to handle your finances if you cannot. New York overhauled its statutory POA form effective June 13, 2021, simplifying execution and adding penalties for improper refusal by banks. Without one, your family may have to petition for guardianship under Mental Hygiene Law Article 81.
• Health Care Proxy. Under Public Health Law Article 29-C, this appoints an agent to make medical decisions if you lose capacity. New Yorkers often pair it with a living will expressing wishes about life-sustaining treatment.

Some plans also include beneficiary designations (on retirement accounts and life insurance), transfer-on-death arrangements, and business agreements, discussed below.

Who needs a will versus a trust in New York?

There is no single answer, and blanket statements like "everyone needs a trust" are misleading. A few realistic New York scenarios:

• A young renter with modest savings may need little more than a will, a power of attorney, and a health care proxy.
• A homeowner who wants heirs to avoid Surrogate's Court may benefit from a revocable living trust, because real estate held in trust passes outside probate. See How to Avoid Probate in New York.
• Someone with out-of-state property (for example, a Manhattan resident with a Florida condo) can use a trust to avoid a second, separate "ancillary" probate in the other state.
• A person concerned about future long-term care costs may consider an irrevocable trust — but only with full awareness of Medicaid's look-back rules, described below.
• Families with a beneficiary who has special needs may need a supplemental needs trust. See Benefits of a Special Needs Trust.

Probate and the New York Surrogate's Court timeline

When a New York resident dies with a will, the named executor petitions the Surrogate's Court in the county where the decedent lived (New York County for Manhattan, Kings County for Brooklyn, etc.). The court issues Letters Testamentary authorizing the executor to act. If there is no will, an administrator is appointed under the intestacy rules of EPTL Article 4 and receives Letters of Administration.

Realistically, an uncontested New York probate often takes roughly 7 months to over a year, depending on the county's backlog, whether all distributees can be located and sign waivers, and whether a will contest arises. Contested matters can run for years. Smaller estates (personal property of $50,000 or less) may qualify for the streamlined small estate / voluntary administration procedure under SCPA Article 13. For a step-by-step illustration, see A Sample NYC Probate Timeline.

The New York estate tax (not an "inheritance tax")

A common confusion: New York has an estate tax, not an inheritance tax. An estate tax is paid by the estate before assets are distributed; an inheritance tax (which New York does not impose) would be paid by the people who receive the property.

The New York estate tax exemption is adjusted over time. For deaths occurring in 2024, the New York basic exclusion amount is $6.94 million (confirm the current figure with the New York Department of Taxation and Finance, as it changes annually). The separate federal estate tax exemption is far higher — $13.61 million per person in 2024 — and is scheduled to drop by roughly half at the end of 2025 unless Congress acts.

New York's most important quirk is the "estate tax cliff." If a taxable estate exceeds the exemption by more than 5%, the exemption phases out entirely and the whole estate becomes taxable — not just the amount over the threshold. The result is that an estate slightly over the line can owe a startling tax. Planning around the cliff (for example, with charitable gifts that bring the estate back under the threshold) is a genuine, NY-specific concern. Advanced strategies are covered in Advanced New York Estate Planning Techniques.

A few accuracy points worth emphasizing:

• Not every trust reduces estate tax. A revocable living trust does not save estate tax — the assets remain part of your taxable estate. Only certain irrevocable structures (credit shelter trusts, irrevocable life insurance trusts, certain gifting trusts) can reduce it.
• Lifetime gifting can remove assets from a taxable estate. The federal annual gift tax exclusion is $18,000 per recipient in 2024 (not the outdated $15,000 figure, and it is a federal rule — New York has no separate gift tax). Be aware that New York "claws back" certain gifts made within three years of death back into the taxable estate.

Trusts and Medicaid: the nuance that matters

It is not true that "a trust qualifies you for Medicaid." Whether a trust helps depends entirely on its type. Assets in a revocable trust are still counted as available resources for Medicaid. To protect assets for long-term care, New Yorkers typically use an irrevocable Medicaid asset protection trust — and these are subject to a five-year look-back period for nursing-home (institutional) Medicaid. Transfers made within the look-back can create a penalty period of ineligibility. (New York's community-based / home-care Medicaid has historically had different rules, with a look-back being phased in.) Long-term care planning should be coordinated with an elder law attorney well before care is needed.

Planning for incapacity, not just death

A large part of estate planning addresses what happens while you are alive but unable to manage your own affairs. A durable power of attorney, a health care proxy, and a properly drafted trust can together avoid an Article 81 guardianship proceeding — a court process that is public, costly, and often slow. Putting these documents in place while you have full capacity is the only way to choose your own decision-makers rather than leaving the choice to a judge.

Business succession in your estate plan

If you own an interest in a closely held New York business, your estate plan should address what happens to that interest. Shareholder, operating, or partnership agreements can set who may acquire your share and on what terms. Buy-sell agreements — frequently funded with life insurance — fix a valuation and a buyer in advance so the surviving owners and your family are not left negotiating during a crisis. Coordinating these agreements with your will or trust prevents conflicting instructions.

Common New York mistakes to avoid

• Creating a trust but never funding it (transferring assets into it), which defeats its probate-avoidance purpose.
• Letting beneficiary designations on retirement accounts and life insurance contradict the will — designations generally control.
• Using an old power of attorney that predates New York's 2021 statutory form, which some institutions may resist.
• Assuming federal exemptions protect you from the New York estate tax — the state threshold is much lower, and the cliff is unforgiving.
• Making large gifts shortly before death without accounting for New York's three-year add-back.

Frequently asked questions

Does a will avoid probate in New York?

No. A will is the document the Surrogate's Court probates. To pass assets outside of probate, New Yorkers use trusts, joint ownership, and beneficiary/transfer-on-death designations.

How much does an estate have to be worth to owe New York estate tax?

For deaths in 2024, estates above roughly $6.94 million may owe New York estate tax, and because of the cliff, estates more than 5% over that figure can be fully taxed. Verify the current exemption with the NY Department of Taxation and Finance.

Will a trust automatically qualify me for Medicaid?

No. Only certain irrevocable trusts help with Medicaid, and transfers are subject to a five-year look-back for nursing-home coverage. A revocable trust does not protect assets from Medicaid.

What's the difference between a revocable and irrevocable trust?

A revocable trust can be changed or undone during your life and is used mainly to avoid probate and plan for incapacity; it does not reduce estate tax or protect against Medicaid. An irrevocable trust gives up control in exchange for potential asset protection, Medicaid, or tax benefits.

Speak with a New York estate planning attorney

Every situation is different, and the right plan depends on your family, your assets, and your goals. The Law Offices of Albert Goodwin handle estate planning and probate throughout New York City and the surrounding counties. To discuss your plan, call 212-233-1233 or email [email protected]. You can also learn more about our New York City estate planning practice.

This article provides general information about New York law and does not constitute legal advice or create an attorney-client relationship. Statutes, exemption amounts, and Medicaid rules change; confirm current figures and consult a qualified attorney about your circumstances.