How To Set Up an Irrevocable Trust in New York

Written by Albert Goodwin, Esq., a New York estate planning and probate attorney admitted to practice in New York State and before the U.S. District Courts for the Southern and Eastern Districts of New York. Last updated January 2025.

An irrevocable trust is one of the most powerful tools in New York estate planning, but it is also one of the easiest to get wrong. Unlike a revocable living trust, an irrevocable trust generally cannot be unwound at will, so the document must be drafted correctly the first time and funded and executed in a way that satisfies New York law. This page walks through the actual step-by-step process of setting one up in New York, the statutes that govern it, and the practical decisions you will face along the way.

If you are still deciding between trust types, you may also want to compare this with our pages on the benefits of a revocable living trust and the benefits of a special needs trust. This page focuses specifically on the mechanics of creating and funding an irrevocable trust under New York's Estate Powers and Trusts Law (EPTL).

What an irrevocable trust is under New York law

Under New York law, a lifetime ("inter vivos") trust is presumed irrevocable unless the trust instrument expressly states that it is revocable. This is the opposite of many people's assumption. EPTL §7-1.16 provides that a lifetime trust is irrevocable unless the creator reserves, by express provision in the document, the power to revoke or amend it. In other words, in New York silence means irrevocable.

Once the grantor (called the "creator" or "settlor") transfers property into a properly drafted irrevocable trust, that property is no longer counted as the grantor's own for many purposes — creditor claims, estate tax inclusion, and Medicaid eligibility. That is exactly why the trust is useful, and also why it cannot simply be reversed. The grantor generally gives up the right to demand the assets back.

Step-by-step: how to set up an irrevocable trust in New York

Step 1 — Identify your specific objective

The structure of the trust depends entirely on what you are trying to accomplish. The three most common goals in New York are (1) Medicaid long-term care planning, (2) removing assets from your taxable estate, and (3) asset protection for yourself or your beneficiaries. Each goal points to a different type of trust with different drafting requirements. A Medicaid Asset Protection Trust, for example, must be drafted as an income-only trust where you cannot reach principal; a credit-shelter or insurance trust is drafted to keep assets out of your gross estate. Mixing these goals carelessly can defeat both.

Step 2 — Choose the right type of irrevocable trust

Common irrevocable trusts used in New York include:

• Medicaid Asset Protection Trust (MAPT) — an income-only trust used to start the 60-month (five-year) Medicaid lookback clock for institutional/nursing-home care. The grantor keeps the right to trust income but not principal.
• Irrevocable Life Insurance Trust (ILIT) — holds a life insurance policy so the death benefit is excluded from the insured's New York and federal gross estate.
• Credit-shelter / bypass trust and QTIP trust — used by married couples to use both spouses' estate-tax exemptions and to control where assets ultimately pass.
• Supplemental (special) needs trust — preserves a disabled beneficiary's eligibility for means-tested benefits; see our dedicated special needs trust page.
• Grantor retained annuity trust (GRAT) and charitable trusts — used in larger estates to transfer appreciation or charitable gifts at reduced transfer-tax cost; see advanced New York estate planning techniques.

Step 3 — Select your trustee (and successor trustees)

For most irrevocable trusts the grantor should not serve as sole trustee, because retaining too much control can pull the assets back into the grantor's estate or make them countable for Medicaid. Many New Yorkers name an adult child, a trusted relative, or a corporate/bank trustee. You should always name at least one successor trustee. New York imposes fiduciary duties on trustees under the EPTL and SCPA, and trustees must keep records and account to beneficiaries. If you are considering a financial institution, see our discussion of using a bank as a trustee.

Step 4 — Have the trust instrument drafted

The trust agreement must be drafted to your specific objective. For a MAPT it must restrict the grantor's access to principal; for tax planning it must avoid retained powers under the Internal Revenue Code that cause estate inclusion. A good New York document will also build in flexibility — for example, naming a trust protector or including a decanting provision (discussed below) — so that the trust can adapt without violating its irrevocable character.

Step 5 — Execute the trust with New York's required formalities

New York is strict about execution. Under EPTL §7-1.17, a lifetime trust must be (1) in writing, and (2) signed by the creator and at least one trustee (other than the creator), and (3) either (a) acknowledged before a notary public in the manner required for recording a deed, or (b) signed in the presence of two attesting witnesses who also sign. A trust that is not properly executed under §7-1.17 is invalid. Any later amendment permitted by the trust must be executed with the same formalities. Because of these requirements, a trust signed informally — or signed by the grantor alone — can fail entirely.

Step 6 — Fund the trust by retitling assets

An unfunded trust accomplishes nothing. After execution, you must actually transfer assets into the trust's name. This typically means:

• Recording a new deed transferring New York real property into the trust;
• Retitling bank and brokerage accounts into the name of the trust;
• For an ILIT, having the trust own (or receiving an assignment of) the life insurance policy.

The date of the transfer matters enormously for Medicaid because it starts the lookback clock. Not every asset belongs in a trust — for the difference between trust-eligible and ineligible assets, see which assets can and cannot go into a trust.

Step 7 — Coordinate Medicaid lookback and gift-tax timing

If your goal is nursing-home Medicaid, New York applies a 60-month (five-year) lookback for transfers to an irrevocable trust for institutional care. Transfers made within that window can trigger a penalty period. (As of this writing New York has not implemented a comparable lookback for community-based/home-care Medicaid, though legislation on that point has been the subject of repeated delay — confirm the current rule before relying on it.) Transfers may also be reportable gifts, so funding should be coordinated with gift-tax planning.

Step 8 — Administer the trust on an ongoing basis

The trustee must obtain a separate taxpayer ID where required, file fiduciary income tax returns, keep the trust's assets separate, and account to beneficiaries. New York beneficiaries have rights to information about the trust; see beneficiaries' rights to trust information.

Building flexibility into an "irrevocable" trust in New York

Irrevocable does not have to mean rigid. New York law provides several mechanisms to adapt a trust over time.

Decanting under EPTL §10-6.6

New York was one of the first states to authorize "decanting," and EPTL §10-6.6 allows a trustee with authority to invade principal to appoint that principal into a new trust with different (often improved) terms, subject to detailed statutory conditions and notice requirements. Decanting can fix drafting problems or update outdated provisions without going to court, but it cannot generally be used to add beneficiaries.

Trust protector and limited powers of appointment

A trust can name a trust protector with limited powers, or grant a beneficiary a limited power of appointment, allowing the disposition of assets to be adjusted within a defined class. Used carefully, these tools preserve the tax and Medicaid benefits of irrevocability while keeping the plan responsive to changing family circumstances.

New York and federal estate-tax context

For 2025, the federal estate and gift tax exemption is $13.99 million per person. New York has its own separate estate tax with a much lower threshold — roughly $7.16 million for 2025 (the figure is indexed and adjusted, so confirm the current amount). New York is notorious for its estate-tax "cliff": if your taxable estate exceeds the exemption by more than 5%, you lose the benefit of the exemption entirely and the whole estate is taxed, not just the excess. This cliff is a major reason irrevocable trusts (such as credit-shelter trusts and ILITs) remain relevant for affluent New Yorkers even though the federal exemption is high. Tax figures change frequently; always verify the current numbers before relying on them.

How an irrevocable trust differs from a revocable living trust

A revocable living trust can be amended or revoked by the grantor at any time, offers probate avoidance and incapacity planning, but provides no creditor, estate-tax, or Medicaid protection because the grantor still controls the assets. An irrevocable trust gives up that control in exchange for those protections. If your primary goal is avoiding probate and managing incapacity rather than tax or Medicaid planning, a revocable trust may be the better fit — read our benefits of a living trust page.

Frequently asked questions

How much does it cost to set up an irrevocable trust in New York?

Costs vary with complexity. A straightforward Medicaid Asset Protection Trust generally costs less than a multi-trust estate plan with tax planning. Funding costs — deed recording fees and transfer paperwork — are separate. We provide a flat-fee quote after reviewing your assets and goals.

How long does it take?

Drafting and execution can often be completed within a few weeks, but funding (recording deeds and retitling accounts) and starting the Medicaid lookback clock are what really matter for timing. For Medicaid planning, the sooner the trust is funded, the sooner the five-year clock starts.

Can an irrevocable trust ever be changed in New York?

Sometimes. Depending on the document and the circumstances, it may be modified by decanting under EPTL §10-6.6, by consent of all beneficiaries, or by court order. A trust protector or limited power of appointment can also build in flexibility from the start. None of these are guaranteed, which is why correct drafting matters.

Is a New York irrevocable trust different from one in other states?

Yes. New York's execution formalities (EPTL §7-1.17), decanting statute (EPTL §10-6.6), separate state estate tax with its "cliff," and its Medicaid rules all differ from other states. A trust drafted for another state may not satisfy New York's requirements, so New York property and residents should use New York-compliant documents.

Are irrevocable trusts public record?

Generally a trust agreement itself is private and not filed with a court, though deeds transferring real property into the trust are recorded publicly. See are trusts public record for more.

Speak with a New York estate planning attorney

Because an irrevocable trust is difficult to undo and the New York execution, tax, and Medicaid rules are technical, this is not an area for guesswork. The Law Offices of Albert Goodwin assist clients throughout New York with drafting, executing, and funding irrevocable trusts. We have offices in New York City, Brooklyn, NY, and Queens, NY. You can call us at 212-233-1233 or email us at [email protected].

This article is for general informational purposes and is not legal advice. Statutory citations and tax figures are current as of the last update shown above and are subject to change; consult an attorney about your specific situation.