A revocable living trust is one of the most flexible estate planning tools available under New York law. Unlike a will alone, a properly drafted living trust lets you manage your assets during your lifetime, plan for incapacity, and pass property to your beneficiaries without the delay, expense and public record of probate in the Surrogate’s Court. We help individuals and families design, fund and administer revocable living trusts suited to their goals.
Whether you own a co-op in Manhattan, a brownstone in Brooklyn, a house on Long Island or investment property in the Hudson Valley, a revocable living trust can simplify the transfer of your assets and give you and your family certainty.
What a Revocable Living Trust Is
A revocable living trust is an arrangement created during your lifetime in which you, as grantor, transfer ownership of assets into a trust that you continue to control. New York’s Estates, Powers and Trusts Law (EPTL) governs how these trusts are created, administered and amended. The trust is revocable: you keep the power to modify or terminate it at any time during your life, as long as you remain mentally competent.
In a typical New York revocable living trust the same person fills three roles. The grantor (or settlor) creates the trust and transfers assets into it. The trustee manages the trust assets, and during your lifetime that is usually you. The beneficiary is the person who benefits from the trust, again you while you are living, with successor beneficiaries named for after your death. On your death or incapacity, a successor trustee you have named takes over and administers or distributes the assets according to your written instructions.
A note on terminology: a “living trust” and a “revocable trust” are in most cases the same thing. A living (inter vivos) trust is simply one created during your lifetime, and most are drafted to be revocable. The distinction that matters under New York law is between revocable and irrevocable trusts.
Key Benefits
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Avoiding New York probate
Probate in New York can be lengthy, expensive and public. The Surrogate’s Court process often takes many months, and sometimes years if a will is contested. Filing fees are based on the size of the estate and can be substantial for larger estates. Assets properly titled in a revocable living trust pass directly to your named beneficiaries without court involvement, saving your family time, money and stress.
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Privacy
A will admitted to probate becomes a public record; anyone can review the inventory of your assets and the identities of your beneficiaries. A revocable living trust is a private document whose terms generally remain confidential, which matters to business owners, high-net-worth individuals and families with complicated personal circumstances.
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Planning for incapacity
If you become incapacitated without a trust, your family may need a guardianship under Article 81 of the Mental Hygiene Law, a court-supervised proceeding that is costly, slow and intrusive. A revocable living trust lets your successor trustee manage your financial affairs without court intervention.
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Out-of-state property
If you own real estate outside New York, your estate may otherwise face ancillary probate in each state where property is located. Holding that real estate in a revocable living trust avoids ancillary probate altogether.
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Flexibility and control
You can amend the trust at any time to add or remove beneficiaries, change distribution terms, name new trustees or restructure the plan as your circumstances change.
Revocable Living Trust vs. Last Will and Testament
| Feature | Revocable Living Trust | Last Will and Testament |
|---|---|---|
| Avoids probate | Yes | No |
| Effective during lifetime | Yes | No, only at death |
| Plans for incapacity | Yes | No |
| Public record | No | Yes, after probate |
| Can be amended | Yes, while competent | Yes, while competent |
For many New Yorkers the most effective plan combines both: a revocable living trust as the primary vehicle, backed by a pour-over will that catches any assets inadvertently left outside the trust. Our page comparing a living trust and a will goes into more detail.
Funding the Trust
A revocable living trust avoids probate only for assets that have actually been transferred into it. This step, called funding the trust, is where many do-it-yourself plans fail. Funding means retitling real estate, which requires preparing and recording new deeds with the county clerk; transferring cooperative apartment shares, which requires the co-op board’s cooperation and consent; retitling bank, brokerage and investment accounts; assigning closely held business interests, LLC memberships and partnership interests; and, where appropriate, updating beneficiary designations on life insurance and retirement accounts. Personal property, intellectual property and valuable collectibles can be assigned as well.
New York co-op transfers need particular care, because boards often impose their own requirements before approving the transfer of shares into a trust. Our page on which assets can and cannot go into a revocable trust covers the details.
Execution Requirements Under EPTL § 7-1.17
A lifetime trust is not valid in New York unless it meets the formalities of EPTL § 7-1.17. The trust must be in writing and either (1) executed and acknowledged by the grantor, and, unless the grantor is the sole trustee, by at least one trustee, before a notary public in the manner required for recording a deed, or (2) signed by the grantor in the presence of two witnesses who also sign. Amendments and revocations generally must be executed with the same formalities. Improper or unwitnessed signing is one of the most common reasons homemade trusts fail, which is why we oversee execution ourselves.
Who Should Consider One
A revocable living trust is not necessary for every New Yorker, but it is particularly valuable if you own real estate, especially several properties or property outside New York; have significant financial assets you want to keep private; want to plan for possible incapacity; have minor children, a blended family or a beneficiary with special needs; own a business and want continuity of management; or simply want to spare your family the delay and cost of Surrogate’s Court.
Income Tax Treatment
During your lifetime a revocable living trust is a “grantor trust” for income tax purposes and is effectively ignored by the IRS. It uses your Social Security number rather than a separate EIN, all trust income is reported on your personal Form 1040, and no separate trust return is required. Creating and funding the trust does not change how you file.
At your death the trust becomes irrevocable and a separate taxpayer. Your successor trustee must obtain an EIN and file a federal Form 1041 and, where applicable, a New York fiduciary return on Form IT-205 for income earned during administration. Because trust income tax brackets are highly compressed, with a trust reaching the top federal bracket at only a few thousand dollars of retained income, trustees often distribute income to beneficiaries to shift it to their lower individual brackets. The successor trustee also obtains date-of-death appraisals, pays debts and expenses, and makes distributions according to the trust terms.
Step-Up in Basis
Under Internal Revenue Code § 1014, assets included in a decedent’s gross estate receive a “step-up” in income tax basis to fair market value at death, wiping out a lifetime of unrealized capital gain for your heirs. Because revocable trust assets remain in your gross estate, they get a full step-up at your death even if no estate tax is owed. That is a real advantage over outright lifetime gifts, which carry over your original, lower basis under IRC § 1015 and can leave your beneficiaries with a large built-in gain. Certain irrevocable trusts can also be drafted to preserve the step-up while achieving Medicaid or estate tax goals, but that takes careful technical drafting and should never be assumed.
New York Estate Tax
A revocable living trust does not by itself reduce estate taxes; its assets are fully included in your gross estate. New York imposes its own estate tax with a “cliff”: an estate that exceeds the New York basic exclusion amount by more than 5% loses the exclusion entirely and is taxed on its full value. For married couples we can build credit shelter (bypass) provisions and disclaimer planning into the trust to use both spouses’ exclusions and reduce state and federal exposure. New York has no separate gift tax, but certain gifts made within three years of death are added back to the estate for New York estate tax purposes, a point we account for in lifetime giving strategies. Our estate tax cliff calculator shows how the cliff works in numbers.
What a Revocable Trust Cannot Do
Because you keep full control of the assets, a revocable trust has real limits, and each of them is a reason someone might need an irrevocable trust instead.
| Limit | Why | What works instead |
|---|---|---|
| No Medicaid asset protection | Assets you can revoke and reclaim remain countable for Medicaid eligibility. | An irrevocable Medicaid Asset Protection Trust (MAPT). New York Medicaid imposes a five-year look-back on transfers for institutional care, so assets are generally protected only once five years have passed. New York has historically not applied a look-back to community-based (home-care) Medicaid, though one has been authorized and repeatedly delayed; the current rules should be confirmed before transferring assets. |
| No creditor protection | Assets you can withdraw at any time remain reachable by your creditors during your lifetime. | An irrevocable trust, depending on its terms, may remove assets from creditors’ reach and files its own return under its own EIN. |
| No estate tax reduction by itself | Revocable trust assets are fully included in your gross estate. | Irrevocable structures such as lifetime gifting strategies, SLATs, ILITs or credit shelter planning built into the trust framework. |
A revocable trust trades asset protection for flexibility; an irrevocable trust trades flexibility for protection. You generally cannot amend an irrevocable trust or freely retrieve its assets, and that loss of control is the price. We help clients weigh which structure, or combination, fits their goals.
What Happens When the Grantor Dies
At the grantor’s death the revocable trust becomes irrevocable, and the successor trustee takes control of the trust assets under the terms of the trust agreement, without petitioning the Surrogate’s Court or obtaining letters testamentary. For real property held in the trust, the successor trustee typically records an affidavit of death of trustee, with a certified copy of the death certificate, in the county where the property is located. In Manhattan, Brooklyn, Queens and the Bronx that recording is made with the City Register through ACRIS (the Automated City Register Information System); in Staten Island and counties outside New York City it is recorded with the County Clerk. This establishes the successor trustee’s authority of record and lets administration proceed far more quickly and privately than probate.
Our Trust Drafting Process
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Consultation
We discuss your family, assets, goals and concerns.
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Plan design
We recommend a structure for your circumstances, integrating the trust with your will, power of attorney, health care proxy and living will.
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Drafting
We prepare the trust agreement and supporting documents in compliance with New York law.
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Execution
We oversee signing and notarization under EPTL § 7-1.17.
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Funding
We retitle assets, prepare deeds and coordinate with financial institutions and co-op boards.
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Ongoing review
We recommend periodic reviews as your family, finances and the law change.
Speak With a New York Trust Attorney
If you would like to find out whether a revocable living trust belongs in your plan, or you are a successor trustee who needs help administering one, call us at 212-233-1233 or email [email protected]. See also our overview of the benefits of a living trust.
