Protecting Your Assets With a Trust in New York

Protecting your assets with a trust in New York means using a legal arrangement, governed by the New York Estates, Powers and Trusts Law (EPTL) Article 7, to hold property for the benefit of yourself and the people you love—often while avoiding probate, preserving privacy, planning for incapacity, and, in the right circumstances, shielding assets from estate taxes, creditors, or the cost of long-term care. A trust is not a single tool but a family of tools. Choosing the right one depends on what you are trying to protect and from what. This guide, prepared by the attorneys at Morgan Legal Group, walks you through the main options in plain English so you can have an informed conversation about your own plan.

What a Trust Actually Is

At its core, a trust is a relationship among three roles. The grantor (also called the settlor) creates the trust and transfers assets into it. The trustee holds and manages those assets according to the trust’s written instructions. The beneficiaries are the people who receive the benefit of the assets. One person can wear more than one hat—in a typical revocable living trust, you might be the grantor, the trustee, and the primary beneficiary all at once during your lifetime.

The power of a trust comes from this separation of legal control from beneficial enjoyment. Because the trust—not you personally—technically owns the assets, those assets can pass outside of the public probate process and, with the right structure, can be insulated from certain risks.

The Main Types of Trusts in New York

Not every trust protects assets the same way. The chart below summarizes the three most common structures we build for New York families.

Trust Type	Can You Change It?	Avoids Probate?	Saves Estate Tax?	Primary Use
Revocable Living Trust	Yes—amend or revoke anytime	Yes	No	Probate avoidance, privacy, incapacity planning
Irrevocable Trust	Generally no	Yes	Yes (assets leave your estate)	Estate-tax reduction, asset protection, Medicaid planning
Supplemental / Special Needs Trust	Limited	Yes	Varies	Preserving means-tested benefits for a disabled loved one

Revocable Living Trusts

A revocable living trust is the most flexible option. As grantor, you keep full control—you can amend it, move assets in and out, or revoke it entirely as long as you are alive and competent. Its primary benefits are that it avoids probate, keeps your affairs private, and provides seamless incapacity management: if you become unable to handle your finances, your named successor trustee steps in without a court guardianship proceeding.

It is important to be honest about what a revocable trust does not do. Because you retain control, the assets remain part of your taxable estate and the trust does not save estate tax. It is a probate-avoidance and control tool, not a tax-shelter. Learn more on our revocable living trust page.

Irrevocable Trusts

An irrevocable trust generally cannot be amended or revoked once created. In exchange for giving up that control, you gain powerful protections. Because the assets legally leave your estate, an irrevocable trust can be used for estate-tax reduction, asset protection from future creditors, and Medicaid planning.

The Medicaid piece carries a critical caveat: New York applies a five-year look-back for transfers into certain irrevocable trusts when determining eligibility for long-term care Medicaid. Transfers made within that window can trigger a penalty period. This is why irrevocable planning works best when started years before care is needed. Our irrevocable trust page explains the trade-offs in detail.

Supplemental (Special) Needs Trusts

A supplemental needs trust, also called a special needs trust (SNT), is authorized under EPTL 7-1.12. It allows you to set aside money for a disabled beneficiary without disqualifying them from means-tested public benefits such as Medicaid and SSI. The trust pays for extras that improve quality of life—therapies, equipment, travel, education—while preserving the government benefits the beneficiary depends on. If you care for a child or relative with a disability, the special needs trust is often the single most important protection you can put in place.

Trust vs. Will: Why the Difference Matters

Many people assume a will alone protects their assets. A will is essential, but it has limits. A will is a public document that must be filed and probated in the Surrogate’s Court before assets can be distributed—a process that takes time, costs money, and exposes your affairs to public view. A trust avoids probate and remains private. For a side-by-side comparison, see our trust vs. will guide. In most well-built New York plans, a trust and a “pour-over” will work together rather than one replacing the other.

The Trustee’s Duties—Protection Goes Both Ways

A trust only protects assets if the person managing it acts responsibly. New York holds trustees to strict fiduciary duties, including:

• The prudent-investor standard under EPTL Article 11-A, requiring the trustee to invest with reasonable care, skill, and caution.
• The duty of loyalty, meaning the trustee must act solely in the beneficiaries’ interest, not their own.
• The duty to account, requiring the trustee to keep records and report to beneficiaries.

Trustees are entitled to reasonable compensation, and New York’s commission schedules are set out in the SCPA and EPTL. Choosing and supporting the right trustee is part of any sound plan—our trust administration team helps fiduciaries meet these obligations correctly.

New York Estate Tax and the 2026 “Cliff”

For higher-net-worth families, estate tax is a central reason to consider an irrevocable trust. In 2026, New York’s basic exclusion amount is $7,350,000. New York also has a notorious “cliff.” Once an estate exceeds 105% of the exclusion—$7,717,500—the exemption phases out entirely, and the estate is taxed on its full value, not just the amount over the threshold. Falling just over the cliff can cost a family hundreds of thousands of dollars. Thoughtful trust planning is often what keeps an estate on the right side of that edge.

Frequently Asked Questions

Does a revocable living trust protect my assets from estate tax?
No. Because you keep control, the assets stay in your taxable estate. A revocable trust avoids probate and manages incapacity, but estate-tax reduction requires an irrevocable structure.

What is the Medicaid five-year look-back?
When you apply for long-term care Medicaid in New York, the state reviews transfers—including to certain irrevocable trusts—made in the prior five years. Transfers in that window may create a penalty period, so early planning matters.

Can a special needs trust really preserve government benefits?
Yes. A supplemental needs trust under EPTL 7-1.12 is designed so that funds held for a disabled beneficiary do not count against means-tested programs like Medicaid and SSI, provided it is drafted and administered correctly.

Do I still need a will if I have a trust?
Almost always, yes. A “pour-over” will catches any assets not titled in the trust and names guardians for minor children. A trust and a will are partners, not substitutes.

Talk to Morgan Legal Group

Asset protection is not one-size-fits-all. The right trust depends on your family, your goals, and your balance sheet. Russel Morgan, Esq. and the team at Morgan Legal Group help New Yorkers across the state build plans that actually hold up. Start by exploring our trusts overview, then schedule a 30-minute consultation to map out the protection that fits your life.