A trust is a legal arrangement in which a grantor transfers assets to a trustee to hold and manage for beneficiaries. In New York, the core benefit of a trust is that property held in it passes outside probate — it never enters New York County Surrogate’s Court. For Manhattan residents, a properly funded revocable living trust can transfer co-op shares or a condo to heirs privately, quickly, and without a court proceeding.
Definitions — Grantor: the person who creates and funds the trust. Trustee: the person or institution who manages trust assets. Beneficiary: the person who benefits from the trust. Corpus: the property held in the trust (also called the principal or res).
Revocable Living Trust vs. Will
The most common planning tool for a Manhattan apartment owner is a revocable living trust. You create it during life, transfer your assets into it, and keep full control — you can amend or revoke it anytime. At death, the successor trustee distributes the assets without probate.
| Feature | Will | Revocable Living Trust |
|---|---|---|
| Goes through probate | Yes (New York County Surrogate’s Court) | No |
| Privacy | Public court record | Private |
| Control during life | Full | Full |
| Avoids guardianship at incapacity | No | Yes (successor trustee steps in) |
| Upfront cost | Lower | Higher |
| Effective at | Death only | Immediately upon funding |
A will still matters even with a trust — a pour-over will catches any asset you forgot to transfer. See wills under New York law.
Irrevocable Trusts and Medicaid Asset Protection (MAPTs)
An irrevocable trust cannot be changed or revoked after creation, and the grantor gives up control of the assets. The trade-off is powerful protection. A Medicaid Asset Protection Trust (MAPT) moves assets — often a Manhattan co-op or condo — out of your name so they are not counted for Medicaid long-term care eligibility, while letting you keep the right to live there.
The critical rule is the five-year lookback: transfers into a MAPT must occur at least 60 months before applying for nursing-home Medicaid, or they trigger a penalty period. Planning early is everything. (Verify current Medicaid figures, which change annually.)
New York Trust Types at a Glance
| Trust type | Revocable? | Primary purpose |
|---|---|---|
| Revocable living trust | Yes | Probate avoidance, incapacity management |
| Irrevocable trust / MAPT | No | Medicaid & creditor protection |
| Supplemental needs trust (EPTL 7-1.12) | Usually irrevocable | Provide for a disabled beneficiary without losing benefits |
| Testamentary trust | Created by will | Manage assets for minors/heirs after death |
| Irrevocable life insurance trust (ILIT) | No | Keep insurance proceeds out of the taxable estate |
A supplemental needs trust under EPTL 7-1.12 lets you provide for a child or relative with a disability without disqualifying them from Medicaid or SSI — vital for many families.
How Funding a Trust Works (and Why Unfunded Trusts Fail)
A trust controls only the assets actually transferred into it. An unfunded trust — signed but never funded — does nothing, and the assets still go through probate. Funding means retitling assets into the trustee’s name:
- A condo: deed the property into the trust.
- A co-op: this is the Manhattan wrinkle. Because you own shares plus a proprietary lease, transferring a co-op into a trust requires the cooperative board’s consent and often a recognition agreement with the lender. Many boards permit trust ownership; some resist. Plan the funding step early. EPTL 7-1.12 specifically contemplates trusts holding co-op shares.
- Brokerage accounts: retitle into the trust name.
Trustee Duties Under New York Law (EPTL 11-2.3)
A trustee is a fiduciary held to New York’s Prudent Investor Act (EPTL 11-2.3): invest with care, diversify, manage prudently, and act solely in the beneficiaries’ interest. A trustee who self-deals or invests recklessly can be held personally liable.
Probate-Avoidance Value for Manhattan Estates
Why does a trust matter so much in Manhattan specifically? A high-value Upper East Side co-op or a Tribeca condo held in your sole name must pass through New York County Surrogate’s Court — a public, multi-month process, sometimes drawing will contests in high-net-worth families. Held in a revocable trust, the same apartment transfers privately and immediately to your successor trustee, who can deal directly with the co-op board on your heirs’ behalf. For the full local picture, see the Manhattan estate guide and New York estate taxes.
Frequently Asked Questions
Do I need a trust if I have a will in New York? A will still goes through probate; a trust avoids it. If you own a Manhattan co-op or condo, value privacy, or want incapacity protection, a revocable trust is often worth the cost.
Can a trust hold my co-op shares? Yes, under EPTL 7-1.12 — but the cooperative board typically must approve trust ownership, so coordinate the funding with the board.
Does a revocable trust protect assets from creditors or Medicaid? No. Only an irrevocable trust offers that protection, and the five-year lookback applies for Medicaid.
Do I still owe New York estate tax if my assets are in a trust? A revocable trust does not reduce estate tax; the assets remain in your taxable estate. See estate taxes.
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