A client came to our Manhattan office last month with a familiar concern. She and her husband had owned their Brooklyn brownstone for over 30 years. It wasn’t just an asset; it was the center of their family’s life. Their children grew up there, and their grandchildren now visited every Sunday. Her question was simple: “How do we make sure this house passes to our kids smoothly, without getting tied up in court for a year?”
For many New York families, this is the central question of their legacy. The answer often involves placing the property into a trust. A trust is a legal arrangement where you transfer ownership of an asset to a trustee—often yourself, initially—who manages it for the benefit of your chosen beneficiaries. When done correctly, this allows the property to bypass the probate process in Surrogate’s Court, saving your family significant time, expense, and public exposure.
But trusts are not one-size-fits-all. The type of trust you choose must match your goals. Are you focused on a simple transfer, or do you have concerns about asset protection or estate taxes?
The Revocable Trust: Control and Simplicity
For the majority of families I represent, the primary vehicle for holding a personal residence is a revocable living trust. The name explains its key features. “Living” means you create it during your lifetime, not in your will. “Revocable” means you retain the power to change it, amend it, or even dissolve it entirely as your circumstances change.
When you place your home into a revocable trust, you typically name yourself as the trustee. This means nothing changes in your day-to-day life. You continue to live in the home, pay the mortgage and taxes, and make all decisions about its upkeep or sale. You maintain complete control. The only difference is on paper—the deed is retitled from your name as an individual to your name as trustee of your trust.
The arrangement’s power is clear upon your death. Because the trust—not you—owns the property, it is not considered part of your probate estate. Your designated successor trustee can then transfer the property to your beneficiaries according to the clear instructions you left in the trust document. This process is private, efficient, and avoids the direct oversight of a court.
The Irrevocable Trust: A Tool for Asset Protection
Sometimes, the goal extends beyond avoiding probate. A family might be concerned about shielding a property from future creditors or the high cost of long-term care. In these situations, we begin to discuss irrevocable trusts.
Unlike a revocable trust, an irrevocable trust is designed to be permanent. Once you transfer an asset into it, you generally cannot take it back. You give up control. This is a significant step, and it is not right for everyone. By relinquishing control, however, you gain a powerful layer of protection. Because you no longer own the asset, it can be shielded from certain future claims against you.
A common example is the Medicaid Asset Protection Trust (MAPT). By transferring a home into a properly structured MAPT and waiting for the five-year “look-back” period to pass, the home’s value may not be counted when determining Medicaid eligibility for nursing home care. This can be a critical strategy for preserving a family’s primary asset for the next generation.
The decision to use an irrevocable trust is a serious one. It involves placing significant faith in your chosen trustee, who has a profound fiduciary duty to manage the property for the good of the beneficiaries. It’s a trade-off—control for protection.
Funding the Trust and Advanced Strategies
Simply signing a trust document is not enough. For a trust to be effective, it must be “funded.” This means formally transferring the title of your real estate into the trust’s name. This critical step is sometimes overlooked. In New York, Estates, Powers and Trusts Law (EPTL) § 7-1.18 confirms that a lifetime trust can only be funded by a writing—such as a new deed—signed and either notarized or executed with the same formality as a will.
For clients with more substantial holdings, other specialized trusts may come into play. A Qualified Personal Residence Trust (QPRT) is an advanced tool used to transfer a primary or secondary residence to beneficiaries at a reduced gift tax value. This is a complex strategy, typically reserved for individuals whose estates exceed the New York State estate tax exemption.
For investment properties, we often advise holding them within a Limited Liability Company (LLC) for liability protection, and then making the trust the owner of the LLC interest. This structure separates business risk from personal assets while still integrating the property into the overall estate plan.
Stewardship. Placing your home or other real estate into a trust is an act of deliberate stewardship. It’s about being intentional with your most significant assets and ensuring your legacy is passed on according to your wishes, not the default rules of the state.
The right choice depends on a careful analysis of your property, your family dynamics, and your long-term vision. If you are considering how to best preserve your real estate for future generations, the logical first step is to locate the current deed to the property and schedule a confidential review of your generational planning goals.
