A trust is a legal arrangement in which a trustee holds and manages property for beneficiaries under terms you set. In New York City its biggest practical benefit is probate avoidance: assets titled in a properly funded revocable living trust pass to your heirs without going through your borough’s Surrogate’s Court — a meaningful advantage when the main asset is a co-op or condo. Trusts are governed by EPTL, including EPTL 7-1.12 for supplemental needs trusts and EPTL 11-2.3 for trustee investment duties.
For NYC owners, trusts solve a specific problem: how to transfer a co-op or condo to your family quickly, privately, and without a court-supervised process. This guide explains the main trust types and when each makes sense.
Key definitions first
Grantor (definition): the person who creates and funds the trust (also called settlor or trustor). Trustee (definition): the person or institution that holds legal title to trust property and manages it under the trust terms and NY law. Beneficiary (definition): the person who benefits from the trust’s assets. Corpus (definition): the property held in the trust — also called the trust principal or res.
Revocable living trust vs. will
A revocable living trust is one you create during life, can change or revoke at any time, and typically serve as your own trustee. You retitle assets — your co-op shares, condo, accounts — into the trust. At death, your successor trustee distributes them outside probate.
| Feature | Will | Revocable living trust |
|---|---|---|
| Avoids probate? | No | Yes (for funded assets) |
| Public record? | Yes — filed with Surrogate’s Court | No — private |
| Effective during incapacity? | No | Yes — successor trustee steps in |
| Upfront cost | Lower | Higher |
| Saves estate tax? | No, by itself | No, by itself (revocable trusts are taxed in your estate) |
| Controls co-op transfer? | Through court | Directly, subject to board consent |
A revocable trust does not save estate tax — its assets are still in your taxable estate. Its value is process: privacy and probate avoidance. For NYC condo and co-op owners who want a smooth, private transfer, that process advantage is the whole point.
Irrevocable trusts and Medicaid Asset Protection Trusts
An irrevocable trust cannot be freely changed or revoked once created — you give up control in exchange for benefits like asset protection or estate-tax reduction. The most common NYC use is the Medicaid Asset Protection Trust (MAPT), used to protect a home or co-op from long-term-care costs.
The catch is the five-year lookback: assets transferred into a MAPT are subject to a 60-month lookback for nursing-home Medicaid eligibility, so the planning must be done well in advance of needing care. New York’s Community Medicaid (home care) historically had no lookback, but a lookback has been authorized and its rollout has been repeatedly delayed — verify the current rule before relying on it. Because NYC co-ops and condos appreciate sharply, putting the residence in a MAPT early can protect substantial value.
Trust types at a glance
| Trust type | Revocable? | Primary purpose | NY note |
|---|---|---|---|
| Revocable living trust | Yes | Probate avoidance, privacy | Taxed in your estate |
| Irrevocable (MAPT) | No | Asset/Medicaid protection | 5-year nursing-home lookback |
| Supplemental needs trust | Usually no | Protect a disabled beneficiary’s benefits | EPTL 7-1.12 |
| Testamentary trust | N/A (in will) | Trust created at death for minors/spouse | Goes through probate first |
| Irrevocable life insurance trust (ILIT) | No | Keep life insurance out of taxable estate | Estate-tax tool |
A supplemental needs trust (SNT) under EPTL 7-1.12 lets you provide for a disabled family member without disqualifying them from means-tested benefits like Medicaid and SSI — essential planning for many NYC families.
How funding a trust works — and why unfunded trusts fail
Creating a trust document is only half the job. You must fund it — retitle assets into the trust’s name. An unfunded revocable trust is an empty box: if your co-op shares are still in your personal name at death, they go through probate anyway, and the trust accomplishes nothing.
Funding a NYC co-op into a trust is its own task: the cooperative corporation must consent to transferring the shares and proprietary lease into a trust, and many boards have specific requirements or restrictions. Condos and real property are funded by deed. Bank and brokerage accounts are retitled with the institution. Skipping the funding step is the single most common reason NYC trusts disappoint.
Trustee duties under NY law: EPTL 11-2.3
A trustee is a fiduciary and must follow New York’s Prudent Investor Act, EPTL 11-2.3 — managing trust assets with care, skill, and caution, diversifying investments, and acting solely in the beneficiaries’ interest. A trustee who self-deals or invests recklessly can be held personally liable. Choosing a trustee who understands these duties (or a professional trustee) matters as much as choosing the trust type.
The NYC probate-avoidance angle
Probate avoidance is worth more in NYC than in much of the state because of how NYC assets are titled. A single-family homeowner upstate transfers a deed; a Manhattan or Brooklyn resident often holds co-op shares plus a proprietary lease that can only transfer with board approval. Run that transfer through probate and you add court timelines on top of the board’s process. A revocable trust, funded in advance with the board’s consent, can collapse that into a single, private step — letting heirs in Park Slope, the Upper West Side, or Forest Hills take over an apartment without a Surrogate’s Court file becoming public record. New York also has no transfer-on-death deeds, so for real property a trust is often the cleanest probate-avoidance route. See the NYC estate guide for borough-by-borough realities and estate taxes for the tax side.
Frequently asked questions
Do I need a trust if I already have a will? Possibly. A will still requires probate. If you own a NYC co-op or condo and want a private, faster transfer — or want to plan for incapacity or Medicaid — a trust adds protection a will alone cannot.
Can I put my co-op into a trust in New York? Often yes, but the cooperative corporation must approve transferring the shares and proprietary lease into the trust. Check your building’s policy before drafting.
Does a revocable trust lower my estate tax? No. Revocable trust assets remain in your taxable estate. To reduce NY estate tax you need irrevocable strategies — see estate taxes.
What is the five-year lookback? A 60-month period before applying for nursing-home Medicaid during which transfers into an irrevocable trust can trigger a penalty. Plan well ahead.
Find the right trust for your NYC estate
Whether a revocable trust, a MAPT, or no trust at all fits depends on your assets and goals. Book a 30-minute consultation with Russel Morgan to talk it through.
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