Most trust problems we are asked to fix were not caused by the wrong intention — they were caused by a trust that was drafted once, signed, and never funded, coordinated, or pressure-tested against New York law. A trust is not a single document. It is a legal structure governed by EPTL Article 7, and its power depends entirely on choosing the right type, drafting it precisely, and titling the right assets into it. As a New York trusts practice, Morgan Legal Group serves clients statewide — from New York City and Long Island through Westchester, the Hudson Valley, and Upstate — and we approach every trust the same way: do it correctly the first time, because the people who rely on a trust usually discover its flaws at the worst possible moment.
This page explains how trusts work under New York law, when to use a revocable versus an irrevocable trust, how trusts interact with the 2026 New York estate tax, and the specialist judgment calls that separate a trust that protects a family from one that merely looks impressive in a binder.
What a Trust Is — and What It Is Not
A trust is a legal relationship in which a grantor (also called a settlor or trustor) transfers assets to a trustee, who holds and manages those assets for the benefit of named beneficiaries under written terms. In New York, the rules for creating, funding, modifying, and administering trusts live in EPTL Article 7.
A trust is not a substitute for the rest of an estate plan. The specialist standard in New York is a coordinated plan, not a single instrument. A comprehensive plan combines:
- A will (EPTL §3-2.1) — including a pour-over will that catches anything left outside the trust;
- One or more trusts (EPTL Article 7);
- A durable power of attorney (GOL §5-1513), using the 2021 statutory short form;
- A health care proxy (Public Health Law Article 29-C).
A trust handles the assets you place inside it. The will, POA, and proxy handle everything the trust does not — and the proxy specifically handles medical decisions, which a financial POA cannot. We cover how these pieces fit together on our estate planning overview, and each document in depth on our wills, power of attorney, and healthcare proxy pages.
Revocable vs. Irrevocable: The Decision That Drives Everything
Nearly every trust in New York falls into one of two families. Choosing the wrong one is the single most common — and most expensive — mistake we correct.
| Feature | Revocable Living Trust | Irrevocable Trust |
|---|---|---|
| Can the grantor change or cancel it? | Yes, freely during lifetime | No (only in narrow circumstances) |
| Avoids probate? | Yes | Yes |
| Reduces NY estate tax? | No | Yes — assets removed from taxable estate |
| Protects assets from creditors? | No | Yes, when properly structured |
| Medicaid planning (5-year look-back)? | No | Yes — a key tool |
| Who controls the assets? | Grantor (as trustee) | An independent trustee |
| Privacy (avoids public probate record)? | Yes | Yes |
The Revocable Living Trust
A revocable living trust is the workhorse of probate avoidance. You create it, name yourself as the initial trustee, and retain full control to amend or revoke it at any time. Because you keep that control, the assets remain yours for tax purposes — a revocable trust provides no estate-tax savings and no asset protection. What it does deliver is meaningful: at death, assets titled in the trust pass to beneficiaries without probate, privately, and often far faster than an estate that must move through Surrogate’s Court. For New Yorkers who own property in more than one state, it also avoids a second, ancillary probate.
The non-negotiable specialist requirement: a revocable trust must be funded. An unfunded trust is an empty box. Re-titling real estate, financial accounts, and business interests into the trust is the step amateurs skip — and the reason “I have a trust” so often still ends in probate.
The Irrevocable Trust
An irrevocable trust trades control for power. Once funded, the grantor generally cannot amend or revoke it, and the assets are managed by an independent trustee. That surrender of control is precisely what allows an irrevocable trust to remove assets from your taxable estate, shield them from creditors, and qualify you for Medicaid while preserving wealth for your family. Irrevocable trusts are where careful drafting matters most: the wrong provision can defeat the tax or Medicaid goal entirely.
Trusts and Medicaid: The Five-Year Look-Back
Long-term care in New York is extraordinarily expensive, and Medicaid is the primary way most families pay for it without exhausting a lifetime of savings. A properly drafted irrevocable Medicaid asset protection trust lets you transfer assets out of your name so they no longer count against Medicaid eligibility — while still allowing you to receive trust income and live in a transferred home.
The catch is timing. Medicaid imposes a five-year look-back on transfers for institutional (nursing home) care. Assets must generally be in the irrevocable trust for five years before they are fully protected. This is why the specialist refrain is “the best time to plan was five years ago; the second-best time is today.” Waiting until a health crisis hits usually means waiting too long.
A revocable trust does nothing here — because you retain control, Medicaid still counts the assets as yours. Only an irrevocable structure achieves protection.
Supplemental Needs Trusts: Protecting Benefits
For a family member with a disability, an outright inheritance can be catastrophic — it can disqualify the person from Medicaid and Supplemental Security Income. A Supplemental Needs Trust (SNT) under EPTL §7-1.12 solves this. The trust holds assets for the beneficiary’s supplemental needs — things government benefits do not cover — without the assets being treated as available resources. Done correctly, an SNT preserves both the inheritance and the benefits. Done carelessly, it forfeits both. This is squarely a job for a specialist.
Trusts and the 2026 New York Estate Tax
A revocable trust avoids probate but saves no estate tax. To actually reduce New York estate tax, you need an irrevocable structure — and you need to understand how brutal the New York “cliff” can be.
For deaths on or after January 1, 2026 through December 31, 2026, the New York basic exclusion amount is $7,350,000. The trap is the cliff: if a taxable 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 excess. Rates are progressive, from 3% up to 16%.
| 2026 New York Estate Tax Figure | Amount |
|---|---|
| Basic exclusion amount | $7,350,000 |
| Cliff threshold (105%) | $7,717,500 |
| Result above the cliff | Entire exemption lost — taxed from dollar one |
| Top marginal rate | 16% |
| New York gift tax | None |
| Gifts added back to estate | Those made within 3 years of death |
Two more specialist points. First, New York has no gift tax — but gifts made within three years of death are pulled back into the taxable estate, so deathbed gifting to dodge the cliff often fails. Second, an estate sitting near the cliff is a planning emergency: a relatively small irrevocable trust transfer can move an estate below the threshold and save hundreds of thousands of dollars. We walk through the math in detail on our NY estate tax guide.
Why “Specialist” Is Not a Marketing Word Here
Trusts fail quietly. A trust that is unfunded, mistyped (revocable when it should be irrevocable), drafted without regard to the Medicaid look-back, or never coordinated with the will and POA can sit unnoticed for years — until a death, a nursing-home admission, or a tax bill exposes the gap. By then, the grantor is often gone or incapacitated, and the fix is far costlier than getting it right would have been.
Our approach is to treat the trust as one moving part in a coordinated plan, attorney-drafted by Russel Morgan, Esq. and his team for New York law specifically. We do not hand families a generic template. We choose the right type, fund it correctly, integrate it with the rest of the documents, and stress-test it against the very scenarios — probate, Medicaid, the estate-tax cliff — it is supposed to survive. For an overview of how we serve clients across the state, see our New York statewide guide.
Frequently Asked Questions
Does a revocable living trust reduce my New York estate tax?
No. Because you keep the power to amend or revoke it, a revocable trust’s assets remain part of your taxable estate. It avoids probate and provides privacy, but for estate-tax reduction you need an irrevocable trust that removes assets from your estate.
Will a trust keep my estate out of Surrogate’s Court?
A properly funded trust avoids probate for the assets titled in it. Assets left outside the trust still pass through your will and may require probate, which is why a coordinated plan pairs the trust with a pour-over will and proper asset titling.
How does the five-year look-back affect a Medicaid trust?
Medicaid imposes a five-year look-back on transfers for nursing-home care. Assets generally must remain in an irrevocable Medicaid asset protection trust for five years before they are fully protected — so the earlier you plan, the better your protection.
What is the New York estate-tax “cliff” in 2026, and how can a trust help?
In 2026 the exclusion is $7,350,000, but an estate exceeding $7,717,500 (105%) loses the entire exemption and is taxed from the first dollar. A well-structured irrevocable trust can move an estate below the cliff and preserve the exemption.
Do I still need a will and a power of attorney if I have a trust?
Yes. A trust only governs the assets inside it. You still need a will (including a pour-over will), a durable power of attorney for financial matters, and a health care proxy for medical decisions. These work together as one plan.
Ready to build a trust that holds up the first time? Schedule a consultation with Russel Morgan, Esq.
Further reading from Morgan Legal Group: how trusts fit an estate plan.