Revocable Trusts

A revocable living trust is a legal arrangement you create during your lifetime to hold and manage your assets. You, as the grantor, transfer assets into the trust and typically serve as your own trustee while you are alive and able to manage your affairs, naming a successor trustee to take over if you become incapacitated or when you die. Because you keep control, you can change its terms or revoke it entirely at any time, as long as you still have the legal capacity to do so.

Fisher Stone prepares revocable living trusts for individuals and families across New York City for a flat fee, quoted up front, after a short, free consultation of about 15 minutes. A licensed New York attorney handles your matter from start to finish, reachable directly by call, email, or text, with no call centers and no handoffs.

How a revocable living trust works

A revocable living trust starts with a written trust document naming the grantor, the trustee, and the beneficiaries, and setting out how the trust is managed. For most people, all three roles start out as the same person: you create the trust, serve as its trustee, and are its primary beneficiary while you are alive.

After the trust is signed, you transfer ownership of your assets, such as bank and investment accounts, real estate, and business interests, into the name of the trust. Because you are also the trustee, you manage those accounts and that property largely the same way as before. The trust document also names a successor trustee, the person or institution who takes over if you become incapacitated or after you die. Our trusts page compares revocable and irrevocable trusts side by side if you are still deciding which fits.

Avoiding probate, and keeping your affairs private

The main practical reason people set up a revocable trust in New York is to keep assets out of probate. Assets titled in the name of the trust are not part of your individual estate when you die, so your successor trustee can manage and distribute them according to the trust’s terms directly, without asking the Surrogate’s Court for permission first.

A will works differently. Even a valid, carefully drafted will has to be filed with the Surrogate’s Court and admitted to probate before your executor has authority to act. A revocable trust avoids that proceeding, but only for the assets that have actually been retitled into the trust’s name, which is why funding the trust matters as much as signing it.

Probate is also a public process. Once a will is filed with the Surrogate’s Court, it becomes part of the public court record, along with information about what you owned and who inherits it. A revocable trust is a private document. It is not filed with a court, and its terms are not made public after your death either.

Planning for incapacity, not only for death

A revocable trust does more than direct what happens after you die. Because you already named a successor trustee when you created the trust, that person can step in to manage the assets held in the trust if you become incapacitated and can no longer manage them yourself. That happens under terms you already wrote, without a family member having to petition a court to appoint someone to manage your finances.

A trust only reaches the assets that have actually been funded into it, so most people pair a revocable trust with a power of attorney, which authorizes someone you choose to act on your behalf for accounts, property, and decisions the trust does not cover.

Funding the trust: the step that makes it work

Signing a trust document is only the first step. A revocable trust only controls the assets that are actually titled in its name, a process called funding the trust. That generally means retitling bank and investment accounts, transferring real estate by deed into the trust, and updating ownership of business interests where appropriate.

An unfunded trust does not accomplish what it was created for. Assets left in your individual name are not affected by the trust at all: they are still yours alone in the eyes of the law, which means they still have to go through probate at your death, the result a revocable trust is usually set up to avoid. Funding deserves attention when the trust is first signed, and again whenever you acquire a significant new asset.

The pour-over will catches what is left out

Most revocable trusts are signed alongside a pour-over will. A pour-over will directs anything still titled in your individual name at your death into the trust, whether it was overlooked or acquired shortly before death and never retitled.

A pour-over will is still a will, so any assets passing through it go through probate before they reach the trust. It is a backstop for what was left out, not a substitute for funding the trust properly while you are alive.

What a revocable trust does not do

A revocable trust is a useful planning tool, but it has limits worth understanding. Because you keep the ability to change or revoke it and continue to control what it owns, the law generally treats those assets as still yours.

• Estate tax. Assets in a revocable trust remain part of your taxable estate, the same as assets you own outright. Estate tax rules and thresholds change over time, and New York applies its own rules alongside federal ones, so whether estate tax applies to a given estate is reviewed case by case rather than estimated in advance.
• Creditors. Because you can take assets back out of the trust at any time, a creditor or a court can generally reach assets in a revocable trust the same way they could reach assets held in your own name.
• Medicaid. If you apply for Medicaid to help pay for long-term care, assets held in a revocable trust are counted as your resources, the same as assets held outside a trust.

Protecting assets from creditors or positioning them outside Medicaid’s asset limits generally requires giving up the kind of control a revocable trust is built to preserve. That is the role of an irrevocable trust instead. Our elder law page covers how Medicaid planning and timing work together.

Revocable trust vs. will vs. irrevocable trust

Choosing among a revocable trust, a will, and an irrevocable trust comes down to how much control you want to keep and what you are trying to accomplish. The table below compares the three directly.

Which of the three fits your situation depends on your goals, your assets, and your family circumstances, and is worth working through with an attorney rather than deciding from a general description alone.