A trust is one of the most useful — and most misunderstood — tools in New York estate planning. Done right, it can keep your family out of probate, shield assets from a future nursing-home spend-down, protect a loved one with disabilities, and reduce or even eliminate New York estate tax. Done wrong, or skipped entirely, it can leave your estate in court for months and your heirs paying tax that careful planning would have avoided.
This page takes a next-steps, checklist-driven approach. Instead of an abstract survey, it walks you through the decisions you actually have to make — in order — so you leave knowing what to do this month, not just what a trust is. Morgan Legal Group and attorney Russel Morgan, Esq. serve clients across all of New York State: New York City, Long Island, Westchester, the Hudson Valley, and Upstate.
A trust is one piece of a coordinated plan. Trusts in New York are governed by EPTL Article 7. But a trust alone is not an estate plan. A complete plan combines a will, trust(s), a durable power of attorney, and a health care proxy, all drafted to work together. Start with our estate planning overview to see how the pieces fit.
Step 1 — Decide what problem the trust is solving
Before choosing a trust type, name the goal. Most New Yorkers come to us for one (or more) of four reasons. The right structure follows the goal.
| Your goal | The tool that fits | What it does |
|---|---|---|
| Avoid probate; keep affairs private | Revocable living trust | Assets titled in the trust pass to beneficiaries without Surrogate’s Court (no estate-tax savings) |
| Protect assets / qualify for Medicaid | Irrevocable trust | Removes assets from your name; starts the 5-year look-back clock |
| Reduce New York estate tax | Irrevocable trust | Moves value out of your taxable estate |
| Provide for a disabled loved one | Supplemental Needs Trust (EPTL 7-1.12) | Preserves means-tested benefits like Medicaid and SSI |
Write your goal down. It will tell you which of the next steps apply to you.
Step 2 — Understand revocable vs. irrevocable
This is the fork in the road for almost every New York trust.
Revocable living trust
A revocable living trust is one you control completely during your lifetime. You can change it, add or remove assets, or revoke it entirely. Its main payoff is probate avoidance: assets properly titled in the trust pass directly to your beneficiaries without going through Surrogate’s Court — faster, private, and without the public filing a will requires.
What a revocable trust does not do is save estate tax. Because you keep control, the law still counts the assets as yours at death. It is a probate tool, not a tax tool.
Irrevocable trust
An irrevocable trust generally cannot be changed once signed, and you give up direct control of the assets. In exchange, the assets are removed from your taxable estate. This is the workhorse for:
- Medicaid planning — assets transferred to a properly drafted irrevocable trust are not counted for long-term-care Medicaid after the 5-year look-back period. Transfer too late, and the look-back can trigger a penalty period.
- Estate-tax reduction — value moved out of your estate is value that can’t be taxed (see Step 4).
- Asset protection — shielding property from future creditors or lawsuits.
The trade-off is control. Choosing between revocable and irrevocable is the single most important conversation to have with a New York trusts attorney, because the wrong choice can be expensive to unwind. Learn more on our trusts and Medicaid pages.
Step 3 — If protecting a disabled loved one, use a Supplemental Needs Trust
If part of your goal is providing for a child, sibling, or parent with a disability, do not leave money to them outright. A direct inheritance can disqualify them from Medicaid, SSI, and other means-tested benefits overnight.
A Supplemental Needs Trust (SNT) under EPTL 7-1.12 holds the inheritance for their benefit while preserving eligibility. The trust pays for things that improve quality of life — therapies, equipment, travel, education — on top of, not instead of, government benefits. This is a precision instrument: the drafting language matters, and a generic template can do real harm. Plan it deliberately.
Step 4 — Run the New York estate-tax numbers (and watch the cliff)
For 2026, New York gives an estate a basic exclusion of $7,350,000 for deaths on or after January 1, 2026 through December 31, 2026. If your taxable estate is under that figure, no New York estate tax is due.
But New York has a feature that surprises families: the cliff. Once an estate exceeds 105% of the exclusion — $7,717,500 — the exemption disappears entirely, and the estate is taxed from the first dollar, not just the amount over the line. The estate-tax rate is progressive, 3% to 16%.
| 2026 New York estate-tax figure | Amount |
|---|---|
| Basic exclusion amount | $7,350,000 |
| Cliff threshold (105%) | $7,717,500 |
| Tax rate range | 3% – 16% (progressive) |
| New York gift tax | None |
| Gifts added back to estate | Those made within 3 years of death |
Two planning points to act on:
- The 3-year add-back. New York has no gift tax, but any gift made within three years of death is pulled back into the taxable estate. Lifetime gifting works — but the clock matters, so don’t wait.
- Falling near the cliff. An estate hovering just above $7,717,500 can owe more in tax than the amount by which it exceeds the limit. Strategic gifting or an irrevocable trust can bring the estate back under the threshold and rescue the entire exemption.
Run your own numbers with our New York estate tax guide, then bring them to a planning session.
Step 5 — Fund the trust (the step most people skip)
A trust only controls what is titled in its name. This is where well-intentioned plans fail: people sign a beautiful trust document, put it in a drawer, and never re-title their house, accounts, or other assets into it. An unfunded trust does nothing.
Funding checklist:
- [ ] Re-deed real property into the trust
- [ ] Re-title bank and brokerage accounts
- [ ] Update beneficiary designations to coordinate (not conflict) with the trust
- [ ] Confirm life insurance and retirement accounts are handled correctly
- [ ] Keep a signed list of trust assets with your records
Funding is not a one-time event. Every time you buy a major asset, ask: should this go into the trust?
Step 6 — Coordinate the trust with the rest of your plan
A trust is not an island. Pair it with:
- A will (EPTL §3-2.1) that includes a pour-over provision sweeping any forgotten assets into your trust. A valid New York will needs two attesting witnesses, the testator’s signature at the end, and publication. Without a will, EPTL Article 4 intestacy rules decide who inherits — not you. See our wills page.
- A durable power of attorney under GOL §5-1513, using the 2021 statutory short form, so a trusted agent can manage finances and even fund or maintain the trust if you become incapacitated. Visit our power of attorney page.
- A health care proxy under New York Public Health Law Article 29-C, naming an agent for medical decisions — a separate document from the financial POA. See our health care proxy page.
Coordinated, these documents close the gaps a trust alone leaves open. For service across the state, see our New York statewide guide.
Step 7 — Your next actions
- Name your goal — probate, Medicaid, tax, or special needs.
- Pick the structure — revocable for probate; irrevocable for protection and tax; SNT for a disabled beneficiary.
- Run your estate-tax numbers against the $7,350,000 exclusion and the $7,717,500 cliff.
- Fund it — re-title every asset that belongs in the trust.
- Coordinate the will, POA, and health care proxy around it.
- Schedule a consultation to put it in motion.
Book a 30-minute consultation with Russel Morgan, Esq. →
Frequently asked questions
Does a revocable living trust save New York estate tax?
No. A revocable trust avoids probate but does not reduce estate tax, because you retain control and the assets are still counted as yours at death. For tax reduction, an irrevocable trust is the right tool.
How does a trust help with Medicaid in New York?
Assets transferred into a properly drafted irrevocable trust are not counted for long-term-care Medicaid once the 5-year look-back period has passed. Because the clock runs five years, the most important factor is starting early.
What happens if I create a trust but never fund it?
Nothing the trust was designed to do. A trust only controls assets titled in its name. If you don’t re-deed real estate and re-title accounts into the trust, those assets still pass through probate or by beneficiary designation. Funding is essential.
Can I avoid the New York estate-tax cliff?
Often, yes. Because an estate over $7,717,500 (105% of the $7,350,000 exclusion) loses the entire exemption, strategic lifetime gifting or an irrevocable trust can bring the taxable estate back under the threshold. Note that gifts made within 3 years of death are added back.
Do I still need a will if I have a trust?
Yes. A will (under EPTL §3-2.1) names guardians for minor children and, through a pour-over clause, catches any assets you never moved into the trust. Without a will, EPTL Article 4 intestacy rules — not your wishes — control those assets.
Further reading from Morgan Legal Group: how trusts fit an estate plan.