A client recently came into our Manhattan office with a declaration: “I’ve been told I absolutely need a trust.” He had heard that a revocable living trust was the only way to avoid probate and protect his family. While his intentions were sound, his assumption was based on a common misunderstanding. Trusts are powerful instruments for legacy stewardship, but they are not a universal fix. In some situations, a trust introduces unnecessary cost, complexity, and even family friction.
For many families I work with, a trust is the cornerstone of a prudent plan. But for others, it is simply the wrong tool for the job. The decision must be intentional, based on a clear-eyed view of both the benefits and the drawbacks.
The True Cost of a Trust
The first conversation we have about trusts often involves cost—not just in dollars, but in time and effort. A trust is not a document you sign and file away. It is a legal entity that must be actively managed. The initial drafting requires more time and legal expense than a simple will because it must account for a wide range of contingencies over decades.
But the more critical, and often overlooked, step is funding the trust. An unfunded trust is nothing more than an expensive piece of paper. To make it work, you must retitle your assets—your home, your brokerage accounts, your business interests—into the name of the trust. This administrative process requires diligence. I have seen otherwise well-laid plans fail because a person signed a trust but never transferred their assets into it. The result was predictable: the assets went through probate, defeating a primary purpose of the trust.
Giving Up More Control Than You Realize
People often create trusts to maintain control over how their assets are distributed after they are gone. While a revocable living trust allows you to retain full control during your lifetime, the situation changes once you pass away or become incapacitated. At that point, your successor trustee steps in.
This individual—or institution—has a strict fiduciary duty to follow the terms of the trust exactly as you wrote them. This sounds good in theory, but it creates rigidity. What if circumstances change? What if a beneficiary has a sudden need that the trust’s distribution schedule does not account for? The trustee is bound by the four corners of the document. They cannot simply do what they think is “best” or what they believe you “would have wanted.” Their job is to execute your written instructions—period. This lack of flexibility can be a significant drawback compared to the more dynamic administration of an estate under a will.
With an irrevocable trust, the loss of control is even more immediate and profound. Once you place assets into most types of irrevocable trusts, they are no longer yours. You cannot take them back or change the terms. This is a powerful tool for asset protection or estate tax mitigation, but it is a step that should never be taken lightly.
Is a Trust Simply Overkill?
The simplest approach is often the most effective. Not every estate in New York needs the structure of a trust. For smaller estates, the probate process is often more straightforward and less expensive than people fear. Under the New York Surrogate’s Court Procedure Act, specifically SCPA Article 13, estates valued at $50,000 or less can qualify for a simplified small estate proceeding, which is far faster and less costly than a full probate.
Furthermore, many assets pass to beneficiaries outside of probate by operation of law, making a trust redundant for those specific assets. These include:
- Life insurance policies with named beneficiaries
- Retirement accounts like IRAs and 401(k)s with named beneficiaries
- Bank accounts designated as “Payable on Death” (POD) or “In Trust For” (ITF)
- Property owned as joint tenants with rights of survivorship
For an individual whose primary assets fall into these categories, a well-drafted will may be all that is needed to handle the remaining property. Forcing everything into a trust can be an unnecessary layer of administration and expense.
The decision to create a trust should not be driven by popular opinion or a desire to avoid probate at all costs. It must be the result of a deliberate analysis of your assets, your family dynamics, and your ultimate goals. The decision is one of stewardship. A trust is one way to manage that responsibility, but it is not the only way.
The essential first step, before creating any legal instrument, is an honest inventory of your assets. We guide our clients through this confidential review to determine if a trust’s benefits truly outweigh its costs and complexities for their family.
