Irrevocable Trusts in New York: What They Are, How They Work, and What Families Need to Know
In This Article
What Is an Irrevocable Trust in New York? Who Owns Property in an Irrevocable Trust? Benefits of an Irrevocable Trust in New York Dangers of Irrevocable Trusts: What You Give Up What Not to Put in an Irrevocable Trust Can an Irrevocable Trust Be Changed in New York?Reviewed by Kent Gross, Esq. — 40+ years handling elder law, estate planning, and guardianship matters in New York.
If you’re planning for your family’s future in New York, someone has probably told you to “put everything in a trust.” But not all trusts work the same way — and an irrevocable trust is a very different commitment than a revocable one.
An irrevocable trust can protect your assets from creditors, reduce your estate tax exposure, and help you qualify for Medicaid. But it also means giving up control of whatever you put into it. That trade-off is worth understanding before you sign anything.
What Is an Irrevocable Trust in New York?
An irrevocable trust is a legal arrangement where you transfer ownership of assets to a trust that you cannot take back, change, or dissolve on your own. In New York State, as of 2026, a lifetime trust is presumed irrevocable unless the trust document expressly states it can be revoked (EPTL § 7-1.9). Once assets are in the trust, they belong to the trust — not to you.
The trust is managed by a trustee (who can be a family member, attorney, or professional trustee) for the benefit of your named beneficiaries. You, the person who created the trust (called the “grantor” or “settlor”), give up the right to control or reclaim those assets.
This is the fundamental trade-off: you surrender ownership and control in exchange for legal protections that a revocable trust cannot provide.
Who Owns Property in an Irrevocable Trust?
The trustee holds legal title to the property. The beneficiaries hold equitable (beneficial) interest. The grantor — the person who created the trust — does not own the property anymore.
In New York, the trustee’s ownership is limited. Under the Estates, Powers and Trusts Law, the trustee takes an estate in trust property only to the extent necessary to carry out the duties imposed by the trust’s terms. The trustee manages and protects the assets according to the trust’s instructions, but they don’t personally benefit from them.
This separation of ownership is what gives irrevocable trusts their power. Because you no longer own the assets:
- Creditors generally cannot reach them (with important exceptions for self-settled trusts under EPTL § 7-3.1)
- The assets may not count toward your estate for New York estate tax purposes
- After the Medicaid look-back period, the assets typically won’t count against Medicaid eligibility
Benefits of an Irrevocable Trust in New York
Estate Tax Protection
New York has its own estate tax with a basic exclusion of $7,350,000 for 2026. Assets properly transferred to an irrevocable trust are removed from your taxable estate, potentially bringing you below that threshold. This matters more than most people realize because of New York’s estate tax “cliff” — if your estate exceeds 105% of the exemption (approximately $7,717,500 in 2026), you lose the entire exclusion and pay tax starting from the first dollar.
Medicaid Planning
An irrevocable trust is one of the primary tools for protecting assets while qualifying for Medicaid long-term care coverage. In New York, Medicaid applies a 60-month (five-year) look-back period for asset transfers. Assets transferred to an irrevocable trust more than five years before you apply for Medicaid are generally not counted against your eligibility. For more on current thresholds, see our guide to New York Medicaid Income and Asset Limits.
Creditor Protection
Once assets are in an irrevocable trust, they’re generally beyond the reach of your personal creditors. However, New York law (EPTL § 7-3.1) does not protect “self-settled” trusts — if you’re both the grantor and a beneficiary, creditors can still reach those assets. The trust must be structured so you do not retain access to the principal.
Probate Avoidance
Assets held in any trust — revocable or irrevocable — pass to beneficiaries outside of probate. In New York, probate through Surrogate’s Court can take 9 to 18 months and involves court fees, attorney costs, and public disclosure of your assets. An irrevocable trust avoids all of that.
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Dangers of Irrevocable Trusts: What You Give Up
The word “irrevocable” means what it says. Once you create this trust and fund it, here’s what you’re giving up:
You cannot take back the assets. The property, money, or investments you transfer belong to the trust. You cannot change your mind and reclaim them (with very limited exceptions under EPTL § 7-1.9, which requires consent of all beneficiaries).
You lose control over how assets are managed. The trustee makes the decisions — not you. If you name yourself as trustee, you undermine the trust’s legal protections and potentially disqualify it for Medicaid planning purposes.
You may lose access to income. Depending on how the trust is structured, you may or may not receive income from the trust. For Medicaid purposes, a trust that allows any distributions to you may be counted as an available resource.
You cannot easily change beneficiaries. Unlike a revocable trust, you generally cannot add or remove beneficiaries after the trust is created.
Gift tax consequences. Transferring assets to an irrevocable trust is a gift for federal tax purposes. Large transfers may require filing a gift tax return (IRS Form 709), although the federal lifetime gift tax exemption is currently $15,000,000 per person (2026).
For these reasons, an irrevocable trust should never be created without careful legal counsel. The protections are significant, but the trade-offs are permanent.
What Not to Put in an Irrevocable Trust
Not every asset belongs in an irrevocable trust. Some common mistakes:
Retirement accounts (401(k)s, IRAs). You cannot transfer a retirement account into a trust without triggering a full taxable distribution. The tax hit would likely wipe out any benefit.
Assets you may need to access. If there’s any chance you’ll need the funds for living expenses, medical bills, or emergencies, do not put them in an irrevocable trust. You cannot get them back.
Your only home (without careful planning). You can put your home in an irrevocable trust, and many New York families do for Medicaid planning. But if the trust is not properly structured, you could lose the right to live there or property tax benefits (like the STAR exemption). An attorney experienced in New York irrevocable trust planning should handle this.
Can an Irrevocable Trust Be Changed in New York?
In limited circumstances, yes — but it’s not easy. In New York State, under EPTL § 7-1.9, an irrevocable trust can be revoked or amended if two conditions are met:
- All persons beneficially interested in the trust provide written consent (acknowledged in the manner required for recording a real property conveyance)
- The creator of the trust also provides written consent
Both requirements must be satisfied. If even one beneficiary objects — or if a beneficiary is a minor or incapacitated — modification through this route may be impossible without court intervention.
New York courts also have the power to modify irrevocable trusts under certain circumstances, such as when the trust’s purpose has become impractical or when modification serves the interests of the beneficiaries. But court modification is expensive, uncertain, and time-consuming.
The practical takeaway: treat an irrevocable trust as permanent. Build in flexibility through careful trust drafting — trust protector provisions, limited powers of appointment, and decanting provisions can provide future options without undermining the trust’s core protections.
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What Happens to an Irrevocable Trust When the Grantor Dies?
The trust continues according to its terms. Unlike a revocable trust (which often distributes assets upon the grantor’s death), an irrevocable trust may continue for years or even generations.
When the grantor dies:
- The trustee continues managing the trust according to its terms
- Assets in the trust are generally not included in the grantor’s taxable estate
- The trustee distributes assets to beneficiaries according to the trust’s schedule — which might be immediately, over time, or upon reaching certain milestones
- The trust must file its own tax return (IRS Form 1041) if it generates income
- In New York, the trust may owe state income tax if it was created by a New York resident or has New York-source income
There is no probate involvement. The assets pass directly according to the trust document, without Surrogate’s Court, without public disclosure, and without the delays that come with estate administration.
Irrevocable Trusts and Medicaid Planning in New York
One of the most common reasons New York families create irrevocable trusts is Medicaid planning — specifically, protecting the family home and savings from being consumed by nursing home costs.
Here’s how it works: New York Medicaid applies a five-year (60-month) look-back period when you apply for long-term care coverage. Any assets transferred during that period may trigger a penalty period during which you are ineligible for Medicaid coverage of nursing home care.
Assets transferred to a properly structured irrevocable trust more than five years before you apply for Medicaid are generally not counted. But the trust must be carefully drafted:
- You cannot be a beneficiary of the trust
- You cannot retain the right to control distributions
- If the trust allows any payments to you or for your benefit, that portion may still be counted as an available resource
This is why timing matters. The earlier you plan, the more protection you have. Waiting until a health crisis hits often means the look-back period hasn’t elapsed, and the transfer can actually hurt your Medicaid eligibility rather than help it.
Are Irrevocable Trusts a Good Idea?
It depends on your situation. An irrevocable trust is a powerful tool, but it’s not for everyone.
Consider an irrevocable trust if:
- You want to protect assets from potential Medicaid spend-down, and you’re planning at least five years in advance
- Your estate is close to or above New York’s $7,350,000 estate tax exemption
- You want to protect assets from future creditors, lawsuits, or divorce proceedings
- You’re comfortable permanently giving up control of the assets you transfer
An irrevocable trust may not be the right fit if:
- You need access to the assets for your own living expenses
- Your estate is well below the estate tax threshold and you don’t anticipate needing Medicaid
- You want the flexibility to change your mind, add or remove beneficiaries, or take assets back
- You’re uncertain about your long-term financial needs
The right choice depends on your goals, your assets, your family situation, and your timeline. An experienced New York estate planning attorney can help you evaluate whether an irrevocable trust fits your plan — or whether a different approach makes more sense.
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Frequently Asked Questions
What is the difference between a revocable and irrevocable trust in New York?
A revocable trust can be changed, amended, or dissolved at any time during the grantor’s lifetime. An irrevocable trust generally cannot — once funded, the grantor gives up ownership and control. Revocable trusts offer flexibility but no creditor protection, no Medicaid planning benefit, and no estate tax reduction. Irrevocable trusts offer all three, at the cost of control.
How much does it cost to set up an irrevocable trust in New York?
Attorney fees for drafting an irrevocable trust in New York typically range from $2,500 to $7,500 or more, depending on the complexity of the trust, the assets involved, and whether Medicaid planning is part of the strategy. This does not include costs for transferring title to real property or other assets into the trust.
Can I be the trustee of my own irrevocable trust?
Technically, yes — but doing so can undermine the trust’s legal protections, especially for Medicaid planning. If you serve as trustee, Medicaid may argue you retained control over the assets. Most attorneys recommend naming a trusted family member, friend, or professional trustee instead.
Does an irrevocable trust protect assets from nursing home costs?
Yes, if properly structured and funded at least five years before you apply for Medicaid. Assets in a qualifying irrevocable trust are generally not counted toward Medicaid eligibility after the 60-month look-back period. However, the trust must not allow any distributions to or for the benefit of the grantor.
Can I put my house in an irrevocable trust in New York?
Yes, and many New York families do this for Medicaid asset protection. However, you need to retain a life estate or right of occupancy (carefully drafted to not undermine the trust’s protections), confirm the STAR exemption is preserved, and understand that you cannot sell the property without the trustee’s involvement. An attorney experienced in New York trust law should handle this.
*The information in this blog post is provided for general informational purposes only and does not constitute legal advice. Reading this content or contacting LGK Lawyers through this website does not create an attorney-client relationship. This post discusses New York law, which may differ from the law in other jurisdictions. For advice specific to your situation, please schedule a consultation.*
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