How a Living Trust Puts You in Charge
By Ronald Fatoullah, Esq.
Estate planning in New York can be particularly challenging. Between the complexities of the New York Surrogate’s Court Procedure Act (SCPA), the state’s separate estate tax regime, and the high cost of long-term care, many families worry about losing control over their assets. One of the most effective tools to address these concerns is a living trust.
By creating a revocable living trust, New Yorkers can manage their wealth during life, provide for incapacity, and transfer assets to beneficiaries outside of probate, while maintaining flexibility and control.
What Is a Living Trust?
A living trust—sometimes called a revocable trust—is a legal document you create during your lifetime to hold and manage your assets. When you set up a trust, you (the “grantor” or “creator”) typically serve as the trustee, keeping full control of your property. You can amend or revoke the trust at any time. If you become incapacitated, or after your death, a successor trustee—someone you choose—steps in to manage or distribute the trust assets.
Key Benefits of a Living Trust
1. Avoiding Probate– New York probate, handled in Surrogate’s Court, can be slow, costly, and public. Even smaller estates may face months of delays. Property in a living trust generally avoids probate, passing directly to your beneficiaries in a private and efficient manner.
2. Planning for Incapacity– If you can no longer manage your affairs, a successor trustee can step in immediately—without the need for a court-appointed guardian under Article 81 of the Mental Hygiene Law, and even without the need for a power of attorney. This saves time, expense, and stress for your loved ones.
3. Flexibility and Control– You decide how your beneficiaries receive their inheritance. The trust can stagger distributions, protect funds for young children, or shield assets from creditors and divorce. Because the trust is revocable, you can adjust it as your life and goals change.
4. Estate Tax Planning– New York has its own estate tax, separate from the federal system. Worse, New York’s “estate tax cliff” can trigger a NYS estate tax on the entire estate if your estate exceeds the exemption amount (currently $7.16 Million) by just over 5%. A living trust can be designed with credit shelter or marital trusts to help eliminate, reduce or defer estate tax exposure.
5. Out-of-State Property– If you own a vacation home in another state, your heirs might otherwise need to go through an ancillary probate there. Titling the property in your trust avoids this extra court process.
A Real-World Example: Protecting a Manhattan Co-op
Consider the case of a Manhattan resident who owns a co-op apartment worth $1.2 million. He wants to make sure his daughter eventually inherits the apartment without the hassle of Surrogate’s Court probate. By transferring the co-op into a revocable living trust, he keeps full control during his lifetime—he can live there, sell it, or refinance it if he chooses. When he passes away, the co-op shares transfer directly to his daughter without court involvement.
But what if his concern isn’t just probate, but also the cost of long-term care, i.e. unexpected home care and/or nursing home care? A revocable trust will not shield the co-op and other assets from Medicaid. In this situation, he could choose to transfer the co-op into an irrevocable Medicaid Asset Protection Trust (MAPT) instead. Please note that there is a 5-year lookback for Medicaid nursing home care but currently no look-back for Medicaid home and community-based care.
This dual approach—using a revocable trust for probate avoidance and flexibility, and an irrevocable trust for Medicaid protection—is often the best way for New Yorkers to balance control with long-term security.
Clearing Up Common Misconceptions
- “I’ll lose control if I put assets in a trust.” Not true—revocable trusts let you retain complete control.
- “A will is enough.” A will goes through probate before the assets are distributed; a living trust bypasses probate.
- “Trusts are only for the wealthy.” While high-net-worth families rely on them, middle-class families benefit just as much— especially when probate costs can eat away at smaller estates, and when assets need to be protected for long-term care.
Conclusion
A living trust gives New Yorkers the ability to stay in control of their assets, their care, and their legacy. It avoids the delays of probate, provides a clear plan if you become incapacitated, and allows for thoughtful estate tax planning. Whether you own a Manhattan co-op, a Long Island home, a bank or brokerage account, or other valuable property, a trust ensures that the property passes smoothly and according to your wishes. And, an irrevocable Medicaid Asset Protection Trust can also avoid probate while protecting assets for long-term care. The attorneys of the Elder Law Practice Group at Meltzer, Lippe, Goldstein & Breitstone, LLP can design the right combination of trusts to protect your family and your future.
Ronald Fatoullah, Esq. Chairs the firm’s Elder Law Practice Group and is a Partner of the firm’s Trusts & Estates Practice Group.
This article is for informational and educational purposes only. It is general in nature and not person or circumstance specific. This article is not intended, nor should it be construed as rendering independent investment, legal or tax advice. It may but does not necessarily constitute attorney advertising.