I often meet with families in our Manhattan office who have owned the same home for 30 or 40 years. They bought a brownstone in Brooklyn or a house in Westchester when it was affordable, raised their children there, and paid off the mortgage. Now, that property isn’t just their primary asset—it’s the heart of their family’s story. Their biggest concern is what happens next. They worry their children will be forced to sell it to cover long-term care costs or that the home will be tied up for a year or more in Surrogate’s Court.
For these families, the question of placing their home into a trust is not an abstract legal exercise. It is a question of stewardship. A trust can be a powerful instrument for ensuring a home passes to the next generation efficiently and privately, but it is not a default decision. The choice requires a deliberate look at your goals, your family’s needs, and the trade-offs involved.
The Primary Goal: Sidestepping Surrogate’s Court
When a New Yorker dies with a house titled only in their name, their will must be validated by the Surrogate’s Court in the county where the property is located. This process is called probate. Probate is a necessary judicial function—but it is rarely fast or private. The will becomes a public document, and the estate’s inventory, including the value of the home, is available for anyone to see. Heirs often wait months, sometimes over a year, for the court to grant the executor the authority to manage or distribute the property.
Placing your home in a properly structured trust completely removes it from the probate process. The trust owns the property, not you. At your death, the person you named as the successor trustee takes control immediately, according to the instructions you laid out in the trust document. There is no court proceeding, no public filing, and no lengthy delay. The transition is private, allowing your family to manage affairs without the added burden of a court case.
Revocable vs. Irrevocable: The Critical Question of Control
Not all trusts are the same. When it comes to real estate, the most fundamental choice is between a revocable and an irrevocable trust. The difference comes down to one word: control.
A revocable living trust is the most common for probate avoidance. You create the trust, transfer your home into it, and typically name yourself as the trustee. You retain full control. You can sell the house, refinance the mortgage, or even dissolve the trust entirely. Because you keep this control, for tax and liability purposes, the law treats the property as if you still own it personally. This means it offers no protection from creditors or future Medicaid claims for long-term care.
An irrevocable trust is a far more permanent arrangement. Once you transfer your home into it, you cannot simply take it back. You give up direct control to a trustee you appoint—perhaps an adult child or a professional fiduciary. This is a significant step, but it creates a legal separation between you and the asset. For families concerned about protecting the home from the staggering costs of nursing home care, this is often the necessary path. By placing the asset outside of your estate five years before needing care, it can be shielded from a Medicaid spend-down.
The decision between them is a direct trade-off between flexibility and protection.
Practical Hurdles and Tax Considerations
Transferring real property into a trust is more than just signing a trust document. It requires executing and recording a new deed. We file a new deed with the county clerk that formally conveys the property from you, as an individual, to you as the trustee of your trust. This process is governed by state law, including provisions like New York Real Property Law § 240-c, which outlines requirements for such conveyances.
Several practicalities must also be addressed:
- Mortgage: If you have a mortgage, transferring the property could technically trigger a “due-on-sale” clause. While federal law generally prevents this for transfers to a revocable living trust, it is a conversation you must have with your lender, especially for an irrevocable trust.
- Title Insurance: Your existing title insurance policy protects you, the individual owner. We must ensure that the policy’s coverage extends to the trust and its trustees to protect against future claims.
- Taxes: A properly drafted trust should preserve important tax benefits. For instance, the capital gains tax “step-up in basis” at death can still apply to a home in a trust, saving your heirs a significant amount in taxes if they decide to sell. Likewise, eligibility for property tax exemptions like the STAR program can usually be maintained, but the trust must contain specific language to do so.
These are not minor details. A mistake in any of these areas can undermine the very reasons you created the trust in the first place.
Stewardship. Ultimately, that is what this is about. Your home is more than an asset; it is a legacy. Deciding whether a trust is the right vehicle to carry that legacy forward depends entirely on your family’s unique circumstances. It requires careful, intentional planning.
If you are considering how to best protect your family’s home for the next generation, the first prudent step is to analyze your current deed and discuss your long-term objectives. You can schedule a confidential review with my firm to determine the appropriate path forward for your property and your family.
