Creating a Trust in New York: Revocable & Irrevocable Trust Attorney

By Albert Goodwin, Esq., New York estate planning and probate attorney. Admitted to the New York State Bar. Last updated: June 2024.

Creating a trust in New York is governed by a specific body of statutory law — primarily the Estates, Powers and Trusts Law (EPTL) — that differs in meaningful ways from the law of other states. Whether you want to avoid Surrogate's Court probate, qualify for New York Medicaid, protect assets from creditors, or provide for a child with special needs, the type of trust you choose and the way it is drafted, executed, and funded must comply with New York rules to be effective. This page explains how trusts actually work under New York law and how our firm approaches building them.

Revocable vs. Irrevocable Trusts Under New York Law

The threshold question in every trust matter is whether the trust should be revocable or irrevocable, because in New York this choice has very different legal consequences.

A revocable living trust can be amended or revoked by the grantor at any time. Its principal benefit in New York is avoiding probate in Surrogate's Court — assets titled in the trust pass to beneficiaries without the need for letters testamentary. However, because the grantor retains control, a revocable trust offers no protection from creditors and no Medicaid benefit. Under New York law, assets in a revocable trust are still considered the grantor's available resources.

An irrevocable trust generally cannot be amended or revoked by the grantor acting alone. Under EPTL 7-1.9, however, an irrevocable trust can be amended or revoked if all persons beneficially interested consent in writing — a uniquely useful New York provision that gives even "irrevocable" trusts a measure of flexibility that does not exist in many other states. Irrevocable trusts are the tool required for genuine Medicaid asset protection and creditor protection, because the grantor surrenders control over the assets.

One important New York rule: under EPTL 7-3.1, a trust is void as to creditors if the grantor is also the sole beneficiary and retains the right to revoke. A trust cannot be used as a self-settled shield to defeat the grantor's own creditors. Proper structuring around this rule is essential.

New York Trust Execution Requirements (EPTL 7-1.17)

New York imposes strict formalities for creating a lifetime (inter vivos) trust. Under EPTL 7-1.17, a lifetime trust must be:

• In writing;
• Executed and acknowledged by the grantor (the person creating the trust) and, unless the grantor is the sole trustee, by at least one trustee, in the manner required for recording a deed (i.e., before a notary public); or
• Signed by the grantor and at least one trustee in the presence of two attesting witnesses.

This dual requirement — that the trustee, not just the grantor, also execute or acknowledge the instrument — trips up many do-it-yourself and out-of-state trusts. A trust that was validly created elsewhere may fail New York's formalities if challenged. Any later amendment of a New York trust must be executed with the same formalities. We draft and supervise the execution of every trust to ensure compliance with EPTL 7-1.17, because a defectively executed trust can be void.

Medicaid Asset Protection Trusts in New York

One of the most common reasons New Yorkers create an irrevocable trust is to preserve assets while qualifying for Medicaid to cover the high cost of nursing home and long-term care. A properly drafted Medicaid Asset Protection Trust (MAPT) removes assets from the grantor's countable resources while allowing the grantor to retain the right to trust income and to live in a transferred home.

Key New York-specific points:

• Look-back period. Transfers into an irrevocable trust are subject to a five-year (60-month) look-back for institutional (nursing home) Medicaid. Transfers within that window create a penalty period of ineligibility. Planning must therefore be done well in advance.
• Community Medicaid look-back. New York has historically not applied a look-back to community (home care) Medicaid, but the State has enacted a 30-month look-back for community-based long-term care services. Its implementation has been repeatedly delayed; current rules should be confirmed with the New York State Department of Health before relying on this distinction.
• Income vs. principal. A MAPT is typically structured so the grantor receives trust income but has no right to principal, which is what keeps the principal out of the Medicaid resource calculation.
• Capital gains and step-up. Retaining a limited power of appointment in the trust generally preserves the step-up in cost basis at death, avoiding a large capital gains hit for the family.

Because Medicaid rules change frequently and are unforgiving, the timing and drafting of a MAPT must be handled with care. We coordinate the trust terms with the grantor's specific assets, the type of care anticipated, and the applicable look-back.

Avoiding Surrogate's Court Probate

In New York, a will must be probated in the Surrogate's Court of the county where the decedent lived — Kings County for Brooklyn, Queens County, New York County for Manhattan, and so on. Probate can take many months and becomes a public proceeding in which the will and the names of beneficiaries are filed in court records. A funded revocable living trust avoids this: assets held in trust pass under the trust terms without court involvement and without becoming public record. For New Yorkers who own real property in more than one state, a revocable trust can also avoid a separate ancillary probate in each state.

Decanting: Fixing an Irrevocable Trust Under EPTL 10-6.6

New York was one of the first states to permit "decanting," and it has one of the most developed decanting statutes in the country. Under EPTL 10-6.6, a trustee with the authority to invade trust principal may "decant" — that is, pour the assets of an existing irrevocable trust into a new trust with updated terms. Decanting can be used to:

• Correct drafting errors or outdated provisions;
• Convert a trust into a supplemental needs trust to preserve a beneficiary's government benefits;
• Change administrative provisions, trustee succession, or the situs of the trust;
• Address changed family or tax circumstances.

The statute distinguishes between trustees with unlimited discretion to invade principal and those with limited discretion, and it imposes notice requirements on interested parties. Decanting is a powerful way to add flexibility to a trust that is otherwise irrevocable, but it must be done within the statute's bounds.

Choosing Trustees, Beneficiaries, and Trust Protectors

The trustee holds legal title to the trust assets and manages them for the beneficiaries, owing them a fiduciary duty. Choosing the right trustee is one of the most consequential decisions in trust planning. We have seen Surrogate's Court accounting proceedings in which a trustee misused trust funds for personal expenses; by the time the abuse surfaced, much of the principal had been dissipated. A New York trustee is held to fiduciary standards and can be surcharged for losses caused by a breach of duty.

To guard against trustee misconduct, a grantor may appoint a trust protector with the power to monitor the trustee, approve major transactions, and even remove and replace a trustee. The protector's authority is defined entirely by the trust instrument, so it must be drafted with precision.

Beneficiaries may be named individually or as a class (for example, "my descendants"). Distributions can be mandatory or left to the trustee's discretion — often tied to a standard of health, education, maintenance, and support (the "HEMS" standard), which has favorable tax treatment. New York beneficiaries have a statutory right to certain trust information and to compel an accounting, which is why clear drafting reduces future disputes.

Funding the Trust — The Step That Cannot Be Skipped

A signed trust document is worthless if it is not funded. Funding means retitling assets into the name of the trustee — for example, deeding New York real property to the trustee, changing bank and brokerage account titles, and assigning interests in entities. We prepare and record the deeds and prepare the assignments needed to transfer ownership. An unfunded revocable trust will not avoid probate, and an unfunded Medicaid trust will not protect anything. Funding is the difference between a trust that works and a trust that fails.

Common New York Trust Scenarios We Handle

• The aging homeowner. A Brooklyn homeowner wants to protect a brownstone from future nursing home costs. We use an irrevocable Medicaid Asset Protection Trust, started early to clear the five-year look-back, structured to preserve the basis step-up and the STAR/senior exemptions.
• The blended family. A grantor in a second marriage wants to provide for a current spouse during life but ensure that the principal ultimately passes to children from a first marriage. A trust accomplishes this in a way an outright bequest cannot.
• The family with a disabled child. A supplemental needs trust preserves SSI and Medicaid eligibility while improving the beneficiary's quality of life.
• The multi-state property owner. A Manhattan resident with a vacation home out of state uses a revocable trust to avoid two separate probates.

Frequently Asked Questions

Does a New York trust have to be filed or recorded?

No. A trust does not get filed with any New York court when created. A deed transferring real property into the trust is recorded with the county, but the trust instrument itself remains private. See our discussion of whether trusts are public record.

Can I be the trustee of my own trust?

For a revocable trust, yes — you can be grantor, trustee, and beneficiary at once. For a Medicaid or creditor-protection trust, you generally cannot serve as trustee of your own irrevocable trust without undermining its protective purpose.

Is a revocable trust enough to protect against creditors or Medicaid?

No. Because you retain control, assets in a revocable trust remain reachable by your creditors and countable for Medicaid. Only a properly structured irrevocable trust achieves those protections.

How is an irrevocable trust changed if circumstances change?

New York offers several routes: amendment with the consent of all beneficially interested persons under EPTL 7-1.9, decanting under EPTL 10-6.6, or a court proceeding. We build flexibility into the document where possible.

Related Reading

• Benefits of a Living Trust
• Advantages and Disadvantages of a Testamentary Trust
• Assets That Can and Cannot Go Into a Revocable Trust
• NYC Trust Attorney Services
• How to Avoid Probate in New York

Speak With a New York Trust Attorney

Trusts are among the most powerful — and most unforgiving — tools in estate planning. A trust drafted without attention to New York's execution formalities, Medicaid look-back rules, or funding requirements can fail precisely when it is needed most. At the Law Offices of Albert Goodwin, we draft, execute, and fund trusts that comply with New York law and are tailored to your assets and goals.

We serve clients throughout New York City and the surrounding counties, with offices in Manhattan, Brooklyn (Kings County), and Queens. To discuss creating a trust, call us at 212-233-1233 or email [email protected].

Authoritative sources: New York Estates, Powers and Trusts Law (EPTL) Articles 7 and 10; New York Surrogate's Court Procedure Act (SCPA); New York State Department of Health Medicaid eligibility guidance. This page is general legal information, not legal advice, and does not create an attorney-client relationship.

About the author: Albert Goodwin is a New York attorney admitted to the New York State Bar whose practice focuses on estate planning, trusts, probate, and estate litigation in the New York City Surrogate's Courts.