Trusts

A trust is one of the most flexible tools in estate planning, and one of the most misunderstood. Many people assume trusts are only for the very wealthy, or picture something so complicated it is not worth the trouble. In practice, a trust is a straightforward legal arrangement that can keep your affairs private, avoid a lengthy probate process, and in some cases protect assets for the long term.

Fisher Stone prepares trusts for individuals and families across New York City for a flat fee, quoted after a short, free consultation of about 15 minutes, before any work begins. A licensed New York attorney handles your matter from start to finish, reachable directly by call, email, or text. No call centers, no handoffs to junior staff.

What is a trust?

A trust is a legal arrangement in which one party, the grantor, transfers assets to be held and managed by a trustee for the benefit of one or more beneficiaries. The trust itself is created by a written document that sets the rules: what the trust owns, who manages it, who benefits from it, and when and how those benefits are distributed.

Trusts can hold almost any kind of asset, including bank accounts, investment accounts, real estate, and business interests. The grantor decides the terms up front, and the trustee is legally bound to follow them. Depending on how a trust is structured, the grantor can also serve as the initial trustee, which is common with a living trust, or name a different trustee to manage the assets on someone else’s behalf.

The two broad categories of trust are revocable and irrevocable, and the difference between them affects control, privacy, and asset protection in ways worth understanding before you decide which one fits your situation.

Revocable living trusts

A revocable living trust is created and takes effect during your lifetime, and you can amend or revoke it at any time as long as you are competent to do so. Most people who set up a revocable trust name themselves as both grantor and trustee, meaning you keep full control over the assets in the trust while you are alive and able to manage them.

The main reason people set up a revocable living trust is to avoid probate. When assets are titled in the name of the trust, they pass to your beneficiaries according to the trust’s terms after your death, without going through the New York Surrogate’s Court probate process. That can mean a faster transfer, less public exposure of your financial affairs, and less burden on your family during an already difficult time. To understand how probate works and why avoiding it matters, see our probate and estate administration page.

A revocable trust also names a successor trustee, someone who steps in to manage the trust if you become incapacitated or after you pass away. That built-in succession plan is one of the practical advantages of a living trust over relying on a will alone.

Irrevocable trusts

An irrevocable trust cannot be changed or revoked once it is established, except in limited circumstances and often only with the consent of the beneficiaries or a court. Setting up an irrevocable trust means giving up control over the assets you place in it, in exchange for benefits a revocable trust cannot offer.

Because you no longer own or control assets held in a properly structured irrevocable trust, those assets can receive stronger protection from creditors and lawsuits than assets you hold directly. An irrevocable trust can also be a component of Medicaid planning, since assets that are no longer considered yours may not count against Medicaid’s asset limits for long-term care eligibility, once the applicable look-back period has passed. Our elder law page covers Medicaid planning and long-term care in more detail, including how the timing of a trust affects eligibility.

The tradeoff is real: once assets are in an irrevocable trust, you generally cannot get them back or change your mind about the terms. Deciding whether that tradeoff makes sense depends on your goals, your family situation, and your health, which is exactly the kind of question to work through with an attorney rather than guess at on your own.

Funding your trust

Creating and signing a trust document is only the first step. A trust only controls the assets that are actually titled in its name, a process called funding the trust. That means retitling bank and investment accounts, transferring real estate by deed, and updating beneficiary designations where the trust is meant to be the owner.

Funding is easy to overlook, especially for accounts or property acquired after the trust is first signed. Anytime you open a new account, buy property, or acquire another significant asset, it is worth checking whether it needs to be added to the trust.

Choosing a trustee

The trustee is responsible for managing trust assets according to the terms you set, including investing prudently, keeping accurate records, filing any required tax returns, and distributing income or principal to beneficiaries as the trust directs. For a revocable living trust, most people name themselves as the initial trustee and choose a successor trustee to take over later.

A successor trustee can be a family member, a trusted friend, or a professional such as an attorney or a bank’s trust department, depending on the size and complexity of the trust and how comfortable the person is with financial and administrative responsibility. Whoever you choose should be someone you trust to follow the trust’s terms and act in the beneficiaries’ interests, since the trustee has a legal duty to do so.

Naming a trustee works alongside the rest of your estate plan rather than in place of it. Most people who set up a trust still need a will to cover assets that are not held in the trust, and many also put a power of attorney in place to authorize someone to handle financial matters if you become unable to manage them yourself. Our estate planning practice covers trusts alongside wills, powers of attorney, and elder law planning, so the pieces of your plan work together.