A trust is a legal arrangement in which a trustee holds and manages property for beneficiaries under terms you set. Its core benefit in New York is that assets titled in a funded trust pass to beneficiaries without going through the Surrogate’s Court at all — avoiding probate, preserving privacy, and, with the right structure, protecting assets from Medicaid spend-down. For New York City owners, a trust is the cleanest way to keep a co-op or condo out of the borough’s probate process and away from a co-op board’s death-transfer gauntlet.
Revocable living trust vs. will
| Feature | Will | Revocable living trust |
|---|---|---|
| Avoids probate | No — goes through Surrogate’s Court | Yes — for assets titled in the trust |
| Privacy | No — probate is public | Yes — terms stay private |
| Control during incapacity | No | Yes — successor trustee steps in |
| Upfront cost | Lower | Higher |
| Effective when | At death, after probate | Immediately on funding |
| Changeable while alive | Yes | Yes (revocable) |
A revocable living trust does not save estate tax — it is a probate-avoidance and incapacity tool. You remain the trustee and control everything during your life.
Irrevocable trusts and Medicaid asset protection
An irrevocable trust cannot be freely changed once created, and that rigidity is the point: assets you no longer control can be shielded from estate tax and from Medicaid. A Medicaid Asset Protection Trust (MAPT) is the most common irrevocable trust in NYC estate planning. By transferring your co-op, condo, or savings into a properly structured MAPT and surviving the five-year lookback, those assets are not counted when you apply for nursing-home Medicaid.
Five-year lookback: New York reviews asset transfers in the five years before a nursing-home Medicaid application. Transfers into a MAPT must be made early — well before care is needed — to be protected.
Trust types compared
| Trust type | Revocable? | Primary purpose |
|---|---|---|
| Revocable living trust | Yes | Avoid probate, manage incapacity |
| Irrevocable trust / MAPT | No | Medicaid protection, estate-tax reduction |
| Supplemental needs trust (EPTL 7-1.12) | Varies | Provide for a disabled beneficiary without losing benefits |
| Testamentary trust | Created by will | Control distributions to minors or heirs after death |
| Irrevocable life insurance trust (ILIT) | No | Keep life insurance out of the taxable estate |
A supplemental (or special) needs trust under EPTL 7-1.12 lets you provide for a disabled family member without disqualifying them from Medicaid or SSI — critical in a high-cost city.
Funding a trust — and why unfunded trusts fail
Creating a trust document is only half the job. You must fund it: retitle your accounts, deed your condo, and reissue your co-op shares into the trust’s name. An unfunded trust is worthless — assets left in your individual name still go through probate no matter how perfect the trust document is. NYC funding has a wrinkle: transferring co-op shares into a trust usually requires the co-op board’s consent and the managing agent’s cooperation, so start early.
Trustee duties under New York law
A trustee is a fiduciary bound by the Prudent Investor Act (EPTL 11-2.3) — they must invest prudently, diversify, avoid self-dealing, and act in the beneficiaries’ interest. A trustee who mismanages trust assets can be surcharged, just like an executor.
Definitions: A grantor (or settlor) creates and funds the trust. The trustee manages it. The beneficiary benefits from it. The corpus (or principal) is the property held in trust.
Probate-avoidance value in New York City
The NYC payoff is concrete. A Manhattan co-op held in your name passes through New York County Surrogate’s Court and then through a co-op board’s death-transfer review — often a months-long ordeal for your executor. The same co-op held in a properly funded revocable trust passes to your successor trustee immediately, with no probate filing and a far smoother board interaction. For condos in Brooklyn or Queens, a funded trust avoids the public probate record and the Surrogate’s Court timeline entirely. With property values across the boroughs high, trusts also pair naturally with estate-tax planning.
Frequently asked questions
Do I need a trust if I already have a will? A will still goes through probate. If avoiding the Surrogate’s Court, keeping matters private, or planning for incapacity matters to you, a trust adds what a will cannot.
Can I put my co-op in a trust? Usually yes, but you need the co-op board’s consent, and not every building permits it. Confirm before drafting.
Does a revocable trust protect against Medicaid? No — only an irrevocable trust (MAPT) does, and only after the five-year lookback.
Decide whether a trust fits
To evaluate whether a revocable or irrevocable trust fits your NYC estate, book a 30-minute consultation with Russel Morgan.