What Is a Trust in New York? A Complete Guide Under New York Law

Reviewed by Albert Goodwin, Esq., a New York estate planning and trust attorney admitted to the New York State Bar, with offices in Manhattan, Brooklyn, and Queens. Last updated: 2024.

A trust is a legal arrangement in which one party, the grantor (also called the settlor or creator), transfers property to a trustee, who holds and manages that property for the benefit of one or more beneficiaries. In New York, trusts are governed primarily by the Estates, Powers and Trusts Law (EPTL), with trust administration disputes and accountings heard in the Surrogate's Court of the county where the grantor lived under the Surrogate's Court Procedure Act (SCPA).

This page is the pillar guide to trusts under New York law. For deeper detail on specific topics, follow the links to our dedicated New York trust pages throughout this article.

The Five Components of a New York Trust

Every valid New York trust requires five elements. Under EPTL 7-1.17, a lifetime (inter vivos) trust must be in writing, executed and acknowledged by the grantor and trustee, and either signed before a notary or witnessed by two persons.

• The grantor. The person who creates the trust and transfers property into it. The grantor's intentions control how the trust is administered.
• The trustee. The person or institution who holds legal title and manages the property. Trust property is titled in the trustee's name as trustee — for example, "Jane Smith, as Trustee of the Smith Family Trust." The grantor should name successor trustees in case the original trustee dies, resigns, or becomes incapacitated.
• The beneficiaries. Those who benefit from the trust. New York recognizes income beneficiaries, lifetime beneficiaries, and remainder beneficiaries, plus successor beneficiaries who take when current beneficiaries die.
• The trust property (the res). The trust must be funded. Under New York law, an unfunded trust is ineffective — the document alone accomplishes nothing.
• The trust document. The written instrument setting out the grantor's directions and the trustee's powers and duties.

Revocable vs. Irrevocable Trusts in New York

The most important distinction is between revocable and irrevocable trusts. A key New York rule: under EPTL 7-1.16, a lifetime trust is presumed irrevocable unless the trust document expressly states it is revocable. This is the opposite of the rule in many states, so the drafting language matters enormously in New York.

A revocable living trust can be amended or revoked by the grantor at any time. It is most often used to avoid probate in the Surrogate's Court and to manage assets if the grantor becomes incapacitated. The common form names the grantor as initial grantor, trustee, and beneficiary, with successors who take over at death. Learn more on our page on the benefits of a living trust, and see which assets can and cannot go into a revocable trust.

An irrevocable trust generally cannot be changed once created. New Yorkers use irrevocable trusts for creditor protection, estate tax reduction, and Medicaid planning. Because assets are removed from the grantor's control, they may also be removed from the grantor's taxable estate.

Comparison: Revocable vs. Irrevocable (New York)

Common Types of Trusts Used in New York

Living trusts. Created during the grantor's lifetime; the most common is the revocable living trust that becomes irrevocable at death.

Testamentary trusts. Created through a will and effective only after the will is admitted to probate in Surrogate's Court. See advantages and disadvantages of creating a testamentary trust.

Special needs (supplemental needs) trusts. New York permits supplemental needs trusts under EPTL 7-1.12 to provide for a disabled beneficiary without disqualifying them from SSI and Medicaid. See the benefits of a special needs trust.

Medicaid asset protection trusts (MAPTs). An irrevocable trust used to shelter the home and other assets while qualifying for nursing-home Medicaid, subject to New York's five-year look-back period.

Spendthrift trusts. New York recognizes spendthrift provisions; under EPTL 7-1.5, a beneficiary generally cannot assign the right to future income from a trust, protecting it from creditors.

Charitable remainder and charitable lead trusts. Split-interest trusts dividing benefits between charitable and non-charitable beneficiaries, with associated income and estate tax advantages.

Grantor retained annuity trusts (GRATs), QPRTs, and ILITs. Sophisticated vehicles used to transfer appreciation, a residence, or life insurance proceeds out of a New York estate. See our overview of advanced New York estate planning techniques.

Generation-skipping trusts. Designed to benefit grandchildren or more remote descendants, requiring attention to the generation-skipping transfer (GST) tax.

Funding a Trust in New York

A trust without assets is just paper. Funding is the step most often neglected. In New York, the funding mechanics depend on the asset:

• Real estate. A new deed transfers the property to the trustee. The deed must be recorded with the County Clerk (or, in New York City, the City Register through ACRIS). Transferring a home to a revocable trust is exempt from New York's real estate transfer tax under most circumstances, and a transfer of a primary residence is generally exempt from the additional "mansion tax" considerations when no consideration is paid.
• Bank and brokerage accounts. Retitle the account into the trust or, for some, name the trust as a payable-on-death beneficiary.
• Retirement accounts. IRAs and 401(k)s are generally not retitled (that would trigger immediate income tax); instead, the trust may be named as a beneficiary, with care taken under the SECURE Act distribution rules.
• Life insurance. The policy is transferred to or names the trust as beneficiary.
• Business interests and tangible personal property. Assignment documents transfer LLC, partnership, or corporate interests and personal property.

Failing to fund a trust leaves assets exposed to probate — defeating the entire purpose. For more on probate avoidance, see how to avoid probate in New York.

How Trusts Are Taxed in New York

Income tax. Trusts file federal Form 1041 and New York Form IT-205. Income kept at the trust level is taxed at compressed rates that reach the top bracket quickly; income distributed to beneficiaries is generally taxed to them on a Schedule K-1. New York also has special rules for resident and nonresident trusts, including an exemption for certain trusts with no New York trustee, source income, or property.

New York estate tax. New York imposes its own estate tax separate from the federal tax. For 2024, the New York basic exclusion amount is approximately $6.94 million (indexed annually). New York has a notorious "estate tax cliff": if a taxable estate exceeds the exclusion by more than 5%, the entire estate — not just the excess — is taxed. Assets in a revocable trust remain in the grantor's taxable estate; assets in a properly structured irrevocable trust generally are not. Credit shelter and disclaimer trusts are commonly used to preserve both spouses' exclusions because New York does not permit estate tax "portability" between spouses.

Gift and GST tax. New York has no separate gift tax, but lifetime gifts made within three years of death are added back to the New York taxable estate. Federal gift tax annual exclusions and the lifetime exemption still apply to transfers to irrevocable trusts.

Trusts and New York Medicaid

Irrevocable trusts are a cornerstone of New York Medicaid planning. Transferring assets into an irrevocable Medicaid asset protection trust starts New York's five-year look-back period for institutional (nursing-home) Medicaid. Transfers made during the look-back can create a penalty period of ineligibility. Assets in a revocable trust offer no Medicaid protection because the grantor retains control. Supplemental needs trusts under EPTL 7-1.12 are a separate tool that lets a disabled person retain Medicaid and SSI while benefiting from trust assets.

Choosing a Trustee

Selecting a trustee is one of the most consequential decisions in trust planning:

• Family member trustees know the family but may have conflicts and lack expertise.
• Professional individual trustees (attorneys, CPAs) bring expertise at added cost.
• Corporate trustees — banks and trust companies — provide continuity and stability but charge higher fees. See our discussion of using a bank as a trustee.
• Co-trustees can balance these considerations.
• Trust protectors may hold limited powers, such as removing and replacing trustees.

Trustee Duties and Liability Under New York Law

A New York trustee is a fiduciary owing strict duties to the beneficiaries:

• Duty of loyalty — acting solely in the beneficiaries' interests, free of self-dealing.
• Duty of prudence — managing assets with reasonable care and skill.
• Duty of impartiality — treating beneficiaries fairly.
• Duty to inform and account — keeping beneficiaries reasonably informed and rendering accountings.
• Prudent investor standard — New York's Prudent Investor Act (EPTL 11-2.3) requires trustees to invest as a prudent investor would, considering the trust's purposes, terms, and risk-return objectives, and generally to diversify.

A trustee who breaches these duties can be surcharged (held personally liable for losses) and removed by the Surrogate's Court for serious misconduct. See our pages on breach of trust, beneficiaries' rights to trust information, and trustee and fiduciary removal.

How a New York Trust Ends

Trusts terminate by their own terms (a date, a beneficiary reaching a set age, or exhaustion of assets), by revocation of a revocable trust, by merger of legal and beneficial title, by court order when the purpose is fulfilled or has become impossible, or by beneficiary consent following the procedural requirements of EPTL 7-1.9, which allows a grantor to amend or revoke a trust with the written consent of all persons beneficially interested. On termination, the trustee distributes the remaining property under the trust's terms and files final tax returns.

Frequently Asked Questions About New York Trusts

Are trusts public record in New York?

Unlike a probated will, a trust is generally a private document and not filed publicly. See are trusts public record and are trusts registered for the details.

Does a New York trust avoid probate?

Yes — assets properly titled in a funded living trust pass outside probate, avoiding the Surrogate's Court process for those assets.

Is a New York trust presumed revocable or irrevocable?

Under EPTL 7-1.16, a lifetime trust is presumed irrevocable unless it expressly states that it is revocable.

Can I be the trustee of my own trust?

Yes, for a revocable living trust the grantor is usually the initial trustee. For an irrevocable Medicaid or estate-tax trust, the grantor typically should not serve as trustee, to preserve the intended protections.

Do I need a lawyer to create a trust in New York?

Trusts are technical legal arrangements, and New York's execution formalities (EPTL 7-1.17) and tax rules make DIY documents risky. An experienced New York estate planning attorney matches the trust to your goals.

Speak With a New York Trust Attorney

Trusts can be powerful but complex legal arrangements, and the right structure depends on your goals, your family, and New York's specific statutory and tax landscape. If you need help establishing or administering a trust, the Law Offices of Albert Goodwin can help. We have offices in New York City, Brooklyn, and Queens. Call 212-233-1233 or email [email protected].

This article is for general informational purposes about New York law and is not legal advice. Statutory references (EPTL, SCPA) and tax figures, including the New York estate tax exclusion, are subject to change — confirm current amounts with the New York State Department of Taxation and Finance and a licensed attorney.