Which Type of Trust Do You Need in New York? Revocable, Irrevocable, Medicaid, SLAT and Testamentary Trusts Compared

By Albert Goodwin, Esq., estate planning and probate attorney practicing in New York. Dollar figures reviewed for 2026.

New York law recognizes several kinds of trusts, and they do different jobs. A revocable living trust keeps your bank account out of Surrogate's Court but does nothing against your creditors and nothing for Medicaid. A Medicaid asset protection trust can save the house but takes the principal out of your hands for the rest of your life. A spousal lifetime access trust can move millions out of your taxable estate but turns on the marriage lasting. Picking the wrong one wastes legal fees and, in some cases, locks in a result you cannot undo.

This page compares the main trust types used by New York residents side by side, with the statutes that govern each. It also covers what no New York trust can do, which matters as much as what each one can. For the detailed case for a revocable trust, read Benefits of a Living Trust. For the question of what property belongs in one, read What Assets Can and Cannot Go Into a Revocable Trust. This page is the comparison.

New York Trust Types at a Glance

Revocable Living Trust

A revocable trust is the trust most New Yorkers mean when they say "I want a trust." You are the creator, the trustee and the beneficiary. You name a successor trustee and the people who take after you. You can amend it, revoke it, or empty it at any time. Under EPTL 7-1.16 a lifetime trust is irrevocable unless the instrument says it is revocable, so the document must say so in words.

What it does: It keeps the assets you have retitled into it out of Surrogate's Court. Your successor trustee takes over on your death certificate rather than on letters testamentary. It lets the successor trustee manage the assets if you lose capacity, which can avoid an Article 81 guardianship proceeding. It keeps the terms of your plan out of the public court file, since a will is filed and open to inspection and a trust is not. It avoids a second, ancillary probate if the trust holds real property in another state. See How to Avoid Probate in New York for the mechanics.

What it does not do: It gives you no protection from your own creditors. EPTL 7-3.1(a) provides that a disposition in trust for the use of the creator is void as against the creator's existing and subsequent creditors. It does nothing for Medicaid. Assets you can revoke are available to you, so they are countable under Social Services Law §366 and the Department of Health regulations. It saves no estate tax, because retained power to revoke keeps the assets in your gross estate under Internal Revenue Code §2038. It does not defeat your spouse's elective share, because a revocable trust is a testamentary substitute under EPTL 5-1.1-A(b)(1)(F). On the plus side, inclusion in your estate means the assets get a stepped-up basis at your death under IRC §1014.

The revocable trust also solves nothing unless it is funded. Under EPTL 7-1.18, a recital in the trust that assets are held in trust is not a transfer. Accounts must be retitled and deeds must be recorded. An unfunded trust with a pour-over will produces a probate, which is the thing the client was trying to avoid.

Irrevocable Trust for Children or Other Third Parties

In this structure you give property away. Someone else is trustee, your children or other named people are the beneficiaries, and you are not. You cannot take the property back. Under EPTL 7-1.9 an irrevocable trust can be amended or revoked only with the written consent of every person beneficially interested, so in practice the gift is final.

Creditor protection: Because you are not a beneficiary, EPTL 7-3.1 does not apply. The beneficiaries' interests get statutory spendthrift protection as to income under EPTL 7-1.5, and trust property is generally exempt from money judgments against a beneficiary under CPLR 5205(c), with exceptions for self-settled trusts and for contributions made shortly before a judgment. As to your own future creditors, the assets are no longer yours. That protection has two limits. First, the transfer must not be voidable. New York's Uniform Voidable Transactions Act, Debtor and Creditor Law Article 10, allows a creditor to unwind a transfer made with intent to hinder, delay or defraud, or made without reasonably equivalent value while you were insolvent or about to incur debts beyond your ability to pay, generally within four years. A doctor who funds a trust after being served with a malpractice complaint is in that zone. Second, you must mean it. If the trustee hands money back to you on request, a court can treat the trust as a sham and the trustee has breached a fiduciary duty to the beneficiaries. See Breach of Fiduciary Duty.

This is the structure discussed in Asset Protection for Doctors and Moving Assets Under One Spouse. The trade-off is total. You lose the income, the principal and the step-up in basis on assets that are excluded from your estate. A gift tax return on Form 709 is usually required.

Medicaid Asset Protection Trust (MAPT)

The MAPT is a specific kind of irrevocable trust drafted for long-term care planning. You transfer the house and often investment accounts. You keep the right to the income and the right to live in the house. You keep no right to principal. A child or other trusted person serves as trustee. Many MAPTs give you a limited power to change who takes the remainder among your descendants, which keeps the assets in your taxable estate on purpose so that they receive a stepped-up basis at death.

How it works with the look-back: Nursing home Medicaid in New York carries a 60-month look-back on transfers under Social Services Law §366(5)(e). A transfer to a MAPT starts that clock. If you apply before 60 months have passed, the Department of Social Services divides the transferred value by the regional nursing home rate to compute a penalty period of ineligibility. After 60 months the transfer is outside the window and the assets are not counted. New York enacted a 30-month look-back for community (home care) Medicaid in 2020, but the state has repeatedly delayed it and it was not in effect as of this writing. Confirm the current status before relying on either rule.

Estate recovery: Social Services Law §369 lets the state recover correctly paid Medicaid from the estate of a recipient who was 55 or older. New York limits the recoverable estate to property passing under a will or by intestacy. A house owned by a MAPT at your death is not part of that estate, so the children take it free of the claim. The retained right to live in the house does not change that result.

What you give up: The principal. If you need $80,000 for a new roof or a grandchild's tuition, the trustee cannot give it to you. The trustee can usually give it to the children, who may choose to help you, but that is their decision. You also give up the ability to sell the house and keep the proceeds, although the trustee can sell it and keep the proceeds in trust, and a properly drafted grantor trust preserves the IRC §121 exclusion on the sale of a primary residence. Pooled supplemental needs trusts under 42 U.S.C. §1396p(d)(4)(C) are a separate tool for people already on community Medicaid with excess monthly income, and they do not involve giving away the house.

Trusts That Reduce New York and Federal Estate Tax

The federal estate tax exemption for 2026 is $15 million per person, indexed for inflation. The New York basic exclusion amount for deaths in 2026 is $7,350,000. New York's rule has a cliff: once a taxable estate exceeds the exclusion by more than 5 percent, the exclusion disappears and the entire estate is taxed from the first dollar. New York also has no portability. A surviving spouse cannot inherit the deceased spouse's unused New York exclusion the way federal law allows. And New York adds back certain taxable gifts made within three years of death under Tax Law §954(a)(3); the sunset date for that rule has been extended more than once, so check the current version.

Credit shelter (bypass) trust: At the first spouse's death, assets up to the New York exclusion go into a trust for the survivor rather than outright. The survivor can receive income and principal for health, support and similar needs. At the second death the trust is not part of the survivor's estate. For a New York couple with $12 million, this is the difference between using one exclusion and using two. The trust can be written into a will or into a funded revocable trust; only the latter avoids probate.

Spousal lifetime access trust (SLAT): One spouse makes a completed gift to an irrevocable trust for the other spouse and descendants. The gift uses the donor's federal exemption while the donor is alive, which also removes the asset from the New York estate (subject to the three-year add-back). The donor keeps indirect access through the beneficiary spouse. Because the donor is not a beneficiary, EPTL 7-3.1 is not triggered. Two risks: if the spouses create mirror-image trusts for each other, the IRS can collapse them under the reciprocal trust doctrine; and if the marriage ends or the beneficiary spouse dies first, the donor's indirect access ends with it.

Irrevocable life insurance trust (ILIT): Life insurance you own is included in your estate under IRC §2042. A policy owned by an ILIT from inception is not. Transferring an existing policy brings it back in if you die within three years under IRC §2035. Premiums are usually funded by annual exclusion gifts with Crummey withdrawal notices to the beneficiaries. An ILIT is often the cheapest way to create liquidity for a New York estate that sits just over the cliff.

Installment sales to a non-grantor trust: Some planners defer capital gain on low-basis real estate by selling it to an independent trust in exchange for an installment note, reporting gain under IRC §453 as payments arrive. The related-party rules in IRC §453(e) and §267 can defeat this if the trust is controlled by or benefits the seller or close family. This is advanced work and is covered in Advanced New York Estate Planning Techniques.

Testamentary Trust

A testamentary trust is written inside a will and comes into existence only when the will is admitted to probate. It must satisfy the will execution requirements of EPTL 3-2.1. The trustee receives letters of trusteeship from the Surrogate's Court under SCPA 1502 and remains subject to the court's jurisdiction, including the duty to account.

It does not avoid probate. Everything that funds it passes through the estate first. What it does is control distribution after death at no cost during life: a trust for children until age 30, an income trust for a surviving spouse with remainder to children from a first marriage, or a supplemental needs trust for a disabled child. For a parent of modest means whose main goal is to keep a 19-year-old from receiving $400,000 outright, a testamentary trust is often enough. The full comparison is at Advantages and Disadvantages of a Testamentary Trust.

Supplemental Needs Trust

EPTL 7-1.12 authorizes trusts for a person with a severe and chronic or persistent disability that supplement, rather than replace, government benefits. A third-party supplemental needs trust is funded with a parent's or grandparent's money, by will or during life, and the remainder goes wherever the creator directs. A first-party trust under 42 U.S.C. §1396p(d)(4)(A) is funded with the disabled person's own money, such as a personal injury settlement or an inheritance that was left outright by mistake, and must pay back Medicaid at the beneficiary's death. That payback is the reason a parent should never leave assets outright to a child on SSI or Medicaid. See Benefits of a Special Needs Trust.

What No New York Trust Will Do

Shield your own assets from your own creditors

New York does not permit self-settled asset protection trusts. Under EPTL 7-3.1(a), a trust you create for your own benefit is void as against your creditors, no matter how the instrument is labeled. Some states, including Delaware, Nevada and South Dakota, permit domestic asset protection trusts. A New York resident who sets one up faces three problems: a New York court may apply New York public policy to a New York domiciliary's assets, particularly real property located here; the federal Bankruptcy Code at 11 U.S.C. §548(e) lets a bankruptcy trustee avoid transfers to a self-settled trust made within ten years with intent to hinder creditors; and any transfer made while insolvent or facing a known claim is voidable under the Debtor and Creditor Law regardless of where the trust sits. The honest version of asset protection for a New York resident is a completed gift to a trust for other people, made while you are solvent and before any claim exists.

Cut your spouse out of the elective share

Under EPTL 5-1.1-A, a surviving spouse may elect to take the greater of $50,000 or one-third of the net estate. The net estate includes testamentary substitutes listed in subsection (b)(1), among them Totten trust accounts, joint accounts, retirement accounts, gifts made within one year of death above the annual exclusion, and any lifetime transfer in which you kept a power to revoke, a power to consume principal, or the right to income or enjoyment. A revocable trust is therefore a testamentary substitute no matter when you funded it. So is a Medicaid asset protection trust in which you kept the income. The one-year rule applies to outright gifts, not to trusts in which you retained an interest.

The blended-family plan that puts the Brooklyn house and the brokerage account in a revocable trust, with the second spouse as income beneficiary and the first-marriage children as remaindermen, does not work against an election. Under 5-1.1-A, for decedents dying after September 1, 1992, an income interest in trust does not satisfy the elective share; the spouse is entitled to the one-third outright. The tools that do work are a written waiver under EPTL 5-1.1-A(e), signed before or during the marriage in a prenuptial or postnuptial agreement; an irrevocable transfer made more than one year before death in which you keep no interest at all; and life insurance payable to the children, since insurance proceeds are not listed among the testamentary substitutes. A trust still has a role in these plans, but the trust is the vehicle, not the shield.

Qualify you for Medicaid while you keep the right to take the money back

Any trust you can revoke, or whose principal the trustee can pay to you, is an available resource. The Medicaid trust works because you have surrendered the principal. There is no drafting trick around that.

Avoid probate if it is never funded

EPTL 7-1.18 is explicit. A trust is valid as to assets only to the extent they have been transferred to it, and for a trust where you are the sole trustee, that means recording the deed or completing the account retitling. A schedule stapled to the back of the trust is not a transfer.

What a Trust Costs Compared With Probate in New York

Probate: The Surrogate's Court filing fee under SCPA 2402 scales with the size of the estate and tops out at $1,250 for estates of $500,000 or more. Executor commissions under SCPA 2307 run 5 percent on the first $100,000, 4 percent on the next $200,000, 3 percent on the next $700,000, 2.5 percent on the next $4,000,000 and 2 percent above that. A family-member executor often waives commissions, but attorney fees and the time cost remain. Letters testamentary in an uncontested matter with all distributees signing waivers can issue in weeks; a matter requiring citation on a distributee who cannot be found, a kinship hearing, or a guardian ad litem for a minor takes months, and Kings, Queens and New York Counties have had meaningful backlogs. See A Sample NYC Probate Timeline and Letters Testamentary for the sequence.

Trust: There is no court filing fee and no wait for letters. The successor trustee presents the death certificate and the trust instrument. Drafting costs more up front than a will because the attorney must also retitle assets, and a trust that holds assets for years incurs ongoing costs: a separate income tax return (Form 1041 and IT-205) for non-grantor trusts, and trustee commissions. SCPA 2309 sets the statutory schedule for trustees: an annual commission of $10.50 per $1,000 on the first $400,000 of principal, $4.50 per $1,000 on the next $600,000, and $3.00 per $1,000 above that, plus 1 percent of principal paid out. A lifetime trust can provide a different compensation arrangement, and a corporate trustee will charge its own published fee schedule; see Using a Bank as Trustee. A child serving as trustee of a parent's revocable trust often waives commissions.

For an estate of $300,000 with one house and cooperative heirs, the cost difference is small and a will may be the better answer. For an estate with real property in two states, a beneficiary who will fight, or an owner who expects to need long-term care, the trust pays for itself.

Disadvantages of Using a Trust

• Funding failures: The most common problem with revocable trusts in New York is that an account was opened after the trust was signed and never retitled, so the estate goes to probate anyway.
• No court oversight: A testamentary trustee must account to the Surrogate's Court. A lifetime trustee accounts only if a beneficiary demands it. That saves money and also removes a check. Beneficiaries do have rights to information; see Beneficiaries' Rights to Trust Information.
• Loss of control in irrevocable trusts: You cannot get the principal back. Changing an irrevocable trust requires the consent of every beneficiary under EPTL 7-1.9 or a decanting under EPTL 10-6.6, each with limits.
• Tax cost of completed gifts: Assets removed from your estate do not receive a stepped-up basis. For a long-held Brooklyn brownstone, the capital gain cost to the children can exceed the estate tax saved.
• Compressed income tax brackets: A non-grantor trust reaches the top federal income tax bracket at roughly $15,000 of retained income, far below the threshold for individuals.
• Perpetuities limit: EPTL 9-1.1 limits New York trusts to lives in being plus 21 years. A multi-generation dynasty trust must use another state's law and a trustee there.
• Cooperative apartments and some lenders: Many co-op boards restrict transfers of shares to a trust, and some lenders require the property to come out of trust at refinancing.

Formal Requirements for a New York Lifetime Trust

Under EPTL 7-1.17, a lifetime trust must be in writing, signed by the creator and, unless the creator is the sole trustee, by at least one trustee. The signatures must be acknowledged before a notary in the manner required to record a deed, or the instrument must be signed in the presence of two witnesses who also sign. Amendments must follow the same formalities unless the instrument provides otherwise. Under EPTL 7-1.16 the trust is irrevocable unless it says it is revocable. Under EPTL 7-1.18 the trust holds only what has actually been transferred to it. A trust that fails these requirements may be ineffective, and the assets would pass under your will or by intestacy. A testamentary trust follows the will formalities of EPTL 3-2.1 instead: signed at the end by the testator, published as a will, and attested by two witnesses within 30 days of each other.

Frequently Asked Questions

Does a revocable trust protect my house from a nursing home in New York?

No. Assets in a revocable trust are countable for Medicaid because you can take them back. Only an irrevocable trust in which you have given up principal, funded at least 60 months before you apply for nursing home Medicaid, keeps the house out of the eligibility calculation.

Can I be the trustee of my own irrevocable trust?

In some structures, yes, so long as you have no power to pay principal to yourself. For a Medicaid asset protection trust, most New York attorneys name a child or other trusted person as trustee so that your control over the principal is never in question.

Do I still need a will if I have a trust?

Yes. A pour-over will catches assets that were never retitled and names a guardian for minor children. Without it, unfunded assets pass by intestacy under EPTL 4-1.1.

Is a trust public record in New York?

Generally no. A will is filed with the Surrogate's Court and can be read by anyone. A lifetime trust is not filed anywhere unless it becomes the subject of litigation. See Are Trusts Public Record?

Can my spouse challenge a trust I created?

Your spouse cannot set the trust aside, but under EPTL 5-1.1-A your spouse can elect against your net estate, and a revocable trust or any trust in which you kept income or control is counted as a testamentary substitute. A signed waiver in a prenuptial or postnuptial agreement is the reliable way to address this.

Which trust fits a second marriage with children from a first marriage?

Usually a combination: an elective share waiver signed by both spouses, a revocable trust that provides for the spouse during life with remainder to the children, and often life insurance for the children. The trust alone does not do it.

Talk to a New York Trust Attorney

The right trust depends on the size of the estate, the age and health of the owner, who the beneficiaries are, and what you are trying to protect against. We draft and fund revocable trusts, Medicaid asset protection trusts, credit shelter and insurance trusts, and supplemental needs trusts for clients in Manhattan, Brooklyn and Queens, and we also represent trustees and beneficiaries when a trust goes wrong. See Trust Attorney in NYC for our trust litigation and administration work. To discuss which structure fits your situation, call the Law Offices of Albert Goodwin at 212-233-1233 or email [email protected].