I often sit with couples who have spent decades building a life together. They own a home in Westchester, share investment accounts, and have children who are now adults. Their financial lives are intertwined, but their estate plan—if one exists at all—is a collection of individual wills drafted years apart. They come to my office seeking a single, coherent plan to honor their partnership and protect their legacy from court intervention.
For many of these families, a joint revocable living trust becomes the cornerstone of their plan. It is an intuitive structure: one trust, created by two people, to hold their shared assets. It is a way to centralize the stewardship of what they have built.
How a Joint Trust Functions for a New York Couple
Think of a joint trust as a vessel. The couple, as the grantors, create the vessel and, as the initial trustees, they steer it. They transfer their assets—real estate, brokerage accounts, business interests—into the name of the trust. While both are alive and capable, nothing changes in their day-to-day financial management. They retain complete control and can buy, sell, invest, and spend trust assets just as they did before.
The “revocable” part is key. Life is not static. A revocable trust can be amended or even completely undone by the grantors at any time. This flexibility is essential for a plan that needs to last for decades.
A joint trust serves two primary objectives:
- Incapacity Planning. If one spouse becomes unable to manage their affairs, the other can step in as the sole trustee, managing all trust assets seamlessly. There is no need to petition a court for a guardianship—a process that is public, costly, and emotionally draining.
- Probate Avoidance. This is the most common motivation. Assets held within a trust do not pass through probate. They are not subject to the delays and public record of New York’s Surrogate’s Court. The successor trustee simply follows the instructions in the trust document to distribute assets to the beneficiaries.
The process is private, efficient, and administered according to the couple’s exact wishes. It is an act of deliberate and prudent planning.
A Critical Detail: New York is a Common Law State
This is where New York law demands careful guidance. Many online articles about joint trusts are written with community property states like California or Texas in mind. New York is a common law state, a distinction with significant tax implications—especially concerning the “step-up” in basis for capital gains.
In a community property state, when one spouse dies, all assets held by the couple typically receive a full step-up in basis to the fair market value at the date of death. This allows the surviving spouse to sell an asset and pay little to no capital gains tax.
That is not how it works in New York. Here, only the deceased spouse’s portion of the assets in a joint trust receives a step-up. The surviving spouse’s portion retains its original basis. This can create a substantial and unexpected tax bill down the road.
This doesn’t disqualify a joint trust. It means the trust must be drafted with intentionality. We structure these trusts to ensure proper asset division and titling to maximize tax advantages available under current law. A generic document cannot account for this detail.
The Power to Revoke and Amend Under New York Law
The control retained by the grantors of a revocable trust is codified in the law. New York’s Estates, Powers and Trusts Law (EPTL) §7-1.16 specifies that a lifetime trust is irrevocable unless it expressly provides that it is revocable. Our trusts are drafted to be explicitly revocable, giving you the power to adapt.
When one spouse passes away, the trust document dictates the next steps. A common approach is for the joint trust to split into two sub-trusts. One—the “Survivor’s Trust”—remains revocable and under the full control of the surviving spouse. The other—often a “Credit Shelter Trust” or “Family Trust”—becomes irrevocable. This irrevocable trust holds the deceased spouse’s share of the estate, protecting it for the ultimate beneficiaries while providing income and support for the surviving spouse during their lifetime.
This structure balances flexibility for the survivor with certainty for the next generation. It ensures the original legacy plan is honored.
When Separate Trusts May Be a Better Choice
A joint trust is an elegant instrument, but it is not the right choice for every couple. I must understand a family’s dynamics before recommending any structure. In my experience, separate trusts are often a more prudent path in certain situations:
- Blended Families. When one or both spouses have children from a previous marriage, separate trusts provide clarity and protection for all heirs.
- Significant Separate Property. If one spouse enters the marriage with substantial personal assets like an inheritance or a business, a separate trust can preserve their character and simplify administration.
- Creditor Concerns. If one spouse works in a high-liability profession, holding assets in separate trusts can offer a greater degree of protection from potential creditors.
Choosing between a joint trust and separate trusts is not about finding a “better” option in the abstract. It is about selecting the structure that best reflects a couple’s specific assets, family situation, and long-term goals. Stewardship.
The creation of a trust is a foundational step in defining how your family’s story will continue. Before deciding on a structure, the first step is to gain clarity on what you own, both jointly and separately. We often begin with a complete asset inventory, which allows us to map out the implications of any planning decision. If you are ready to take that step, our firm can provide you with a worksheet to help organize your financial picture for a preliminary review.
