What Is a Living Trust and How Does It Work in New York?

By Albert Goodwin, Esq., a New York estate planning and Surrogate's Court attorney with offices in Manhattan, Brooklyn, and Queens. Reviewed for 2025 tax figures.

A living trust is a revocable trust you create during your lifetime to hold your assets, manage them if you lose capacity, and pass them to your beneficiaries at death without a Surrogate's Court proceeding. New York law calls it a "lifetime trust" and governs it mainly through Article 7 of the Estates, Powers and Trusts Law (EPTL). This guide explains how a living trust works under New York law, how to fund it with a New York house or co-op, what it costs, and when a will or another tool is the better choice. For a shorter discussion of the advantages alone, see benefits of a living trust. For a list of what belongs in the trust, see assets that can and cannot go into a revocable trust.

What a Living Trust Is Under New York Law

A trust has three roles: the grantor (also called the creator or settlor) who transfers property into the trust, the trustee who holds legal title and manages the property, and the beneficiaries for whom the property is held. In a typical New York living trust, you fill all three roles at once. You are the grantor, the initial trustee, and the lifetime beneficiary. You keep full control. The trust instrument names a successor trustee who takes over if you become incapacitated or die, and it names the people or charities who receive the property after your death.

One New York rule catches people off guard. Under EPTL 7-1.16, a lifetime trust is irrevocable unless the instrument expressly says it is revocable. A trust that is silent on revocation is locked. A properly drafted New York living trust states in plain terms that the grantor may amend or revoke it.

New York Execution Requirements: EPTL 7-1.17

A living trust in New York must satisfy EPTL 7-1.17(a). The statute requires that the trust:

• be in writing;
• be executed and acknowledged by the grantor before a notary in the manner required to record a deed in New York, or be signed in the presence of two witnesses who also sign the instrument; and
• be executed and acknowledged (or witnessed) by at least one trustee, unless the grantor is the sole trustee.

Most New York practitioners do both: the grantor and trustee sign before a notary and two witnesses sign as well. That belt-and-suspenders approach matters because a pour-over will under EPTL 3-3.7 can only pour assets into a trust that was executed in the manner EPTL 7-1.17 requires. A trust that fails the execution test is void, and the property you thought was in it passes under your will or, if there is no will, by intestacy.

How the Trust Operates During Your Life

While you are alive and competent, a living trust changes almost nothing about your day-to-day finances.

• Income tax: A revocable trust is a grantor trust under Internal Revenue Code sections 671 through 677. You report all trust income on your own Form 1040 and New York IT-201. Under Treasury Regulation 1.671-4, the trust may use your Social Security number; no separate return and no separate EIN are needed during your lifetime.
• Control: As trustee you buy, sell, refinance, and spend as before. You sign as "[Your Name], as Trustee of the [Name] Revocable Trust."
• Basis step-up: Because you keep the power to revoke, the trust assets are included in your gross estate under IRC section 2038, and your beneficiaries receive a stepped-up basis at your death under IRC section 1014. A living trust does not cost your family the step-up.

How the Trust Operates If You Lose Capacity

A will does nothing while you are alive. A living trust does. If you can no longer manage your affairs, the successor trustee named in the instrument steps in. Most New York trusts define incapacity by written certification from one or two physicians, which avoids a Mental Hygiene Law Article 81 guardianship proceeding for the trust assets. The successor trustee can pay your bills, manage the house, and deal with the brokerage firm without court involvement.

The trust only covers assets titled in it. You still need a durable power of attorney under General Obligations Law Article 5, Title 15 for assets outside the trust (retirement accounts, for example) and a health care proxy for medical decisions. See our page on advance directives in New York.

How the Trust Operates After Your Death

At your death the trust becomes irrevocable. The successor trustee obtains a death certificate, applies for an EIN, and administers the trust under its terms. No petition for letters testamentary or letters of administration is filed for trust assets. Compare this with the court timeline on our sample NYC probate timeline, and see how to avoid probate in New York for the full range of probate-avoidance tools.

Two points are often misstated on general-audience websites:

• A will can also delay distribution. It is not true that a will requires immediate distribution. A will can create a testamentary trust that holds assets for a minor, a spendthrift, or a disabled beneficiary for decades. The difference is that the testamentary trust is created and supervised through Surrogate's Court, and in New York a testamentary trustee may need to account to the court. We compare the two on advantages and disadvantages of a testamentary trust.
• Debts do not disappear. The successor trustee remains responsible for your valid debts and your final income and estate taxes before distributing to beneficiaries. There is no seven-month creditor cut-off of the kind SCPA 1802 provides in a probate estate, so a careful trustee waits a reasonable period and resolves known claims first.

After death the trust files its own fiduciary returns (Form 1041 and New York IT-205). If a pour-over will is also probated, the trustee and executor may make an IRC section 645 election to treat the trust as part of the estate for income tax purposes.

Funding the Trust: EPTL 7-1.18

A living trust controls only what is actually transferred into it. EPTL 7-1.18 is explicit: a lifetime trust is valid only as to assets that have been transferred to it, and a transfer is not accomplished by a recital in the trust instrument. Attaching a "Schedule A" that lists your house and accounts does nothing by itself. For assets capable of registration (real estate, stocks, bonds, bank and brokerage accounts), transfer means recording the deed or completing registration in the name of the trust or trustee. For everything else, transfer requires a written assignment describing the asset with particularity.

An unfunded trust is the most common failure we see. The grantor signs a trust, never retitles anything, and the family ends up in Surrogate's Court anyway.

Funding With a New York House or Investment Property

1. Deed: You sign a deed (usually a bargain and sale deed without covenants, or a quitclaim deed) from yourself individually to yourself as trustee of the trust. The deed should recite the trust's name and date.
2. Form TP-584: The New York State Combined Real Estate Transfer Tax Return must be filed with the deed. A transfer to your own revocable trust for no consideration generally owes no state transfer tax; the mere change of identity or form of ownership rule in Tax Law section 1405(b)(6) also applies. The form must still be filed.
3. Form RP-5217 (RP-5217NYC in the five boroughs): The Real Property Transfer Report is filed with the deed. The state fee is $125 for residential property.
4. New York City RPTT: In the five boroughs you also file the NYC-RPT through ACRIS. A transfer to a revocable trust where the grantor remains the beneficiary is generally treated as a mere change of form and is not taxed, but the return must be filed and the exemption claimed. Outside the city, check for county or town transfer taxes.
5. Recording: The deed and forms are recorded with the City Register (ACRIS) or the county clerk. Recording fees vary by county and page count.
6. Mortgage: Under the federal Garn-St Germain Act, 12 U.S.C. 1701j-3(d)(8), a lender may not enforce a due-on-sale clause when residential property of fewer than five units is transferred into a revocable trust in which the borrower remains a beneficiary and occupant. Notify the lender anyway, and confirm your homeowner's insurance names the trustee.
7. Title insurance: Ask your title company to confirm that coverage continues for the trustee. Many current policies extend coverage to a trust established by the insured for estate planning; older policies may need an endorsement.
8. Exemptions: STAR, senior citizen, and veterans exemptions generally continue when the grantor stays the beneficiary and occupant. Notify the assessor or the NYC Department of Finance so the exemption is not dropped.

Funding With a Co-op or Condo

A co-op apartment is not real property. You own shares in the corporation and a proprietary lease. Transferring them to a trust requires the board's consent. Many New York co-op boards permit transfers to revocable trusts but require an occupancy agreement, a personal guarantee from the grantor, and payment of transfer-agent fees. Some boards waive the flip tax for estate planning transfers; some do not. Expect the process to take weeks to months and to require the trust instrument or a summary of its terms. If the board refuses, the fallback is a pour-over will or a specific bequest, which means probate for the apartment.

A condominium unit is real property and is deeded like a house. Check the bylaws for a right of first refusal or notice requirement; most condo boards waive it for a transfer to the owner's own revocable trust.

Bank and Brokerage Accounts

Each institution has its own form to retitle an account in the name of the trustee. Bring the trust instrument or a certification of trust. Some banks prefer that you open a new account titled to the trust and transfer the balance. Keep a working checking account in your own name if you prefer, and pair it with a payable-on-death (Totten trust) designation under EPTL 7-5.1 so it also avoids probate.

Assets You Should Not Retitle

• IRAs, 401(k)s, and other retirement accounts: Retitling these to a trust is a taxable distribution of the entire balance. Leave them in your name. You may name the trust as a beneficiary, but the SECURE Act's ten-year payout rule and the trust's drafting then matter. Discuss this before naming a trust.
• Life insurance and annuities: The policy stays in your name; you may name the trust as beneficiary so the proceeds are managed under the trust terms.
• Jointly owned property with right of survivorship: Already passes outside probate to the survivor. Transferring one spouse's half into a trust can break the survivorship form and should be done deliberately or not at all.

Tangible Property and Business Interests

Furniture, art, jewelry, and vehicles are transferred by a signed assignment that describes each item with particularity, as EPTL 7-1.18 requires. LLC membership interests are assigned by a written assignment and an amendment to the operating agreement; check for transfer restrictions first. Shares in a closely held corporation are reissued in the trustee's name.

Amending or Revoking a New York Living Trust

EPTL 7-1.17(b) controls how you change a revocable trust. Any amendment or revocation must be in writing, signed by the person the trust authorizes to make it, and, unless the trust instrument says otherwise, acknowledged before a notary or signed before two witnesses in the same manner as the original trust. The change takes effect when executed. If you are not the sole trustee, written notice must be delivered to at least one other trustee within a reasonable time. A handwritten note or a verbal instruction to a child does not amend a New York trust.

EPTL 7-1.9 is a different statute that is often cited incorrectly. It allows the creator of a trust that does not reserve a power to revoke (an irrevocable trust) to amend or revoke it with the written, acknowledged consent of every person beneficially interested. For a revocable living trust you do not need anyone's consent; you use the power reserved in the instrument and follow EPTL 7-1.17(b).

The Pour-Over Will: EPTL 3-3.7

Every New York living trust should be paired with a pour-over will. EPTL 3-3.7 permits a will to leave property to the trustee of a lifetime trust that was executed before or at the same time as the will, in the manner EPTL 7-1.17 requires. The will catches any asset you forgot to fund, acquired later, or could not transfer (a co-op the board would not approve, a lawsuit recovery, a final paycheck). Those assets still go through probate, but they end up governed by the trust. The pour-over will is also where you nominate a guardian for minor children. See wills in New York City.

How Long a New York Trust Can Last: EPTL 9-1.1

New York has not adopted the Uniform Statutory Rule Against Perpetuities and does not allow perpetual "dynasty" trusts. Under EPTL 9-1.1, every interest must vest, if at all, within lives in being at the creation of the trust plus 21 years, and the absolute power of alienation may not be suspended for longer than that period. For a living trust, the measuring lives are generally the beneficiaries alive at the grantor's death. In practice this still permits a trust that holds assets for a child until age 30 or 35 and then for grandchildren during their lifetimes. A New York attorney drafts the trust with a perpetuities savings clause so a drafting error does not void a gift.

What a Living Trust Does Not Do in New York

• No estate tax savings. Revocable trust assets are included in your gross estate for both federal and New York estate tax. New York's basic exclusion amount is $6,940,000 for deaths in 2024 and $7,160,000 for deaths in 2025. New York also has a "cliff": if your taxable estate exceeds the exclusion by more than 5 percent, the entire estate is taxed, not just the excess. A living trust does nothing to address this. Tools that do are discussed on advanced New York estate planning techniques.
• No Medicaid protection. Assets in a revocable trust are counted as your available resources when you apply for Medicaid. Transferring them to a revocable trust is not a transfer for Medicaid purposes, so it neither starts nor avoids the 60-month look-back that applies to nursing home Medicaid in New York. Only an irrevocable Medicaid asset protection trust, funded more than five years before the application, removes assets from the calculation.
• No creditor protection. EPTL 7-3.1(a) provides that a trust for the use of the creator is void as against the creator's existing and subsequent creditors. Your creditors can reach a revocable trust during your life and after your death.
• No disinheriting a spouse. Under EPTL 5-1.1-A, a trust you kept the power to revoke is a testamentary substitute. Your surviving spouse's elective share (the greater of $50,000 or one-third of the net estate) is computed including the trust assets.
• Not confidential from beneficiaries. The trust is not filed in court, so it is not a public record (see are trusts public record and are trusts registered in New York). After your death, however, beneficiaries are entitled to information and an accounting from the trustee. See beneficiaries' rights to trust information.

Living Trust vs. Will vs. Life Estate Deed vs. Beneficiary Designations in New York

Who Should Not Use a Living Trust in New York

• Small estates. If your probate assets consist of personal property worth $50,000 or less and no real property in your sole name, your family can use voluntary administration under SCPA 1301. It is fast and inexpensive. A living trust adds cost without much benefit.
• Your main asset is a jointly owned home. A house owned as tenants by the entirety or joint tenants with right of survivorship passes to the survivor automatically. The surviving spouse can then decide whether a trust, a life estate deed, or a TOD deed makes sense.
• Medicaid protection is the priority. A revocable trust gives none. An irrevocable trust, with its loss of control, is the tool for that goal.
• You will not fund it. If you are unlikely to retitle the house and move the accounts, the trust will fail under EPTL 7-1.18 and the estate will be probated anyway. A well-drafted will may serve you better.
• You want a bank or professional trustee. Institutional trustees charge annual fees and often have account minimums. See using a bank as trustee before deciding.

What a Living Trust Costs in New York City and How Long It Takes

Attorney fees for a living trust package in New York City vary with the complexity of the plan and are commonly quoted as a flat fee. A complete package typically includes the trust, a pour-over will, a durable power of attorney, a health care proxy, and a living will. Ask for a written quote and confirm whether the fee includes the deed and the funding work, because the funding is where the time goes.

Beyond the attorney's fee, budget for:

• the $125 RP-5217 fee and county or ACRIS recording fees for each deed;
• co-op transfer-agent and attorney review fees, and any flip tax the board does not waive;
• a title endorsement if your policy requires one; and
• after death, an EIN application (free) and fiduciary income tax return preparation.

Drafting and signing a trust usually takes a few weeks after the initial consultation. Recording a deed in ACRIS can take several weeks. Co-op board approval is the slowest step and can take months. Brokerage firms generally retitle accounts within a few weeks of receiving the paperwork. Plan on the whole process taking one to three months, longer if a co-op is involved.

Mistakes We See in Surrogate's Court

• The signed, unfunded trust. The decedent paid for a trust years ago, never deeded the house, and the family must probate a pour-over will. The trust still governs the result, but the probate avoidance was lost.
• The deed that was never recorded. A signed deed left in a drawer does not satisfy EPTL 7-1.18. The house is a probate asset.
• The handwritten amendment. A note changing a beneficiary without a notary or two witnesses does not satisfy EPTL 7-1.17(b) and invites litigation. See inheritance disputes in NYC.
• No pour-over will. Assets outside the trust pass by intestacy under EPTL 4-1.1, often to people the decedent never intended to benefit.
• Retirement accounts retitled to the trust. An avoidable income tax bill on the entire balance.

Frequently Asked Questions

Does a New York living trust need to be notarized?

Under EPTL 7-1.17 it must be either acknowledged before a notary in the manner required to record a deed or signed in the presence of two witnesses who also sign. Most New York attorneys do both.

Does a living trust need to be filed or registered in New York?

No. New York has no trust registry and the trust is not filed with any court during your life. The only public record created is the deed, if you transfer real property.

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

Yes. A pour-over will under EPTL 3-3.7 covers assets outside the trust and is the only place to nominate a guardian for minor children.

Can I be the trustee of my own living trust in New York?

Yes. Most grantors serve as initial trustee and name a successor. If you are the sole trustee, EPTL 7-1.17 does not require a separate trustee signature.

Does a living trust protect my house from a nursing home?

No. A revocable trust gives no Medicaid protection. An irrevocable trust funded more than five years before the application is the tool for that goal.

Does putting my house in a living trust trigger New York transfer tax?

Generally no. A transfer to your own revocable trust for no consideration owes no state transfer tax and is exempt from the NYC RPTT as a mere change of form, but the TP-584, RP-5217, and NYC-RPT must still be filed with the deed.

Speak With a New York Living Trust Attorney

If you are weighing a living trust against a will or a life estate deed, or you have a trust that was never funded, we can help. The Law Offices of Albert Goodwin draft and fund revocable trusts for clients in Manhattan, Brooklyn, Queens, and the surrounding counties, and we represent trustees and beneficiaries in Surrogate's Court. Learn more about our trust attorney services in NYC, or call 212-233-1233 or email [email protected] to schedule a consultation.