I recently met with the adult children of a new client. Their mother, a lifelong resident of Brooklyn, had passed away suddenly. They knew she had savings, but when they went to her bank, they were turned away. Because her accounts were titled only in her name, the funds were frozen. They could not access a dollar to pay for the funeral or the mortgage on her home without an order from the Surrogate’s Court—a process that would take months.
This scenario is a common one in our practice. Many people believe a Last Will and Testament is enough to ensure a smooth transfer of assets. For liquid assets like bank accounts, a will alone does not prevent them from being locked into the probate process. This is why we often discuss placing bank accounts into a revocable living trust.
Probate, Privacy, and Access to Funds
When an asset is owned by an individual at death, it becomes part of their probate estate. In New York, the will must be validated by the Surrogate’s Court and an executor must be officially appointed before assets can be gathered and distributed. This public process can be lengthy and, for a grieving family that needs to pay final expenses, frustrating.
A revocable living trust creates a separate legal entity to hold your assets. You create it, you transfer your bank accounts into it, and you name yourself as the initial trustee. You retain full control—you can deposit, withdraw, and close accounts just as you always have. The only difference is the name on the statement: instead of “Jane Smith,” it might read “Jane Smith, Trustee of the Jane Smith Revocable Trust.”
Because the trust—not you—owns the account, the asset is not part of your probate estate upon your death. Your designated successor trustee can step in almost immediately, present the trust document and a death certificate to the bank, and manage the funds according to your instructions. No court approval is required. The process is private, efficient, and gives your family access to necessary funds when they need them most.
A Plan for Incapacity—Not Just Death
Avoiding probate is a significant benefit, but it is not the only one. A trust is also one of the most effective tools for managing your affairs if you become incapacitated.
If you suffer a stroke or develop dementia and can no longer manage your finances, a simple power of attorney can be rejected by financial institutions. A trust, however, is a stronger instrument. Your successor trustee—often a spouse, adult child, or professional fiduciary—can take over management of the trust assets without delay. They have a fiduciary duty to act in your best interest, paying your bills and managing your investments without needing to petition a court to have you declared incompetent.
This is a crucial element of stewardship. Planning is not just for what happens after you are gone; it is for the contingencies of life. A properly funded trust ensures that your financial life continues to be managed by someone you chose, according to rules you established.
The Mechanics of Funding a Trust in New York
Creating the trust document is only the first step. For the trust to be effective, it must be funded. This means you must retitle your bank accounts in the name of the trust. This critical step is too often overlooked. An empty trust avoids probate on nothing.
The process involves working directly with your bank to change the account ownership from your individual name to your name as trustee. While you are alive and well, you maintain complete control. The “revocable” nature of the trust is codified in New York law—under Estates, Powers and Trusts Law (EPTL) § 7-1.16, you have the statutory right to amend or revoke the trust at any time, assuming the document does not state otherwise.
A trust is not the right instrument for every person or every account. Sometimes, smaller “convenience” accounts are left outside a trust. For individuals with significant assets or complex family dynamics, however, using a trust to hold liquid assets is a foundational piece of a deliberate and prudent legacy plan.
The goal is to create a structure that functions when you cannot—whether due to incapacity or death. It replaces uncertainty and court delays with a clear, private, and intentional plan executed by a person you selected.
If you are unsure how your current accounts are titled, a prudent first step is an asset review to map your holdings and determine which are exposed to probate.
