Most people who research an irrevocable trust don’t actually need another long explanation of what a trust is — they need to know what to do, and in what order. This page is built as a working checklist for New York families: the concrete next steps to create, fund, and run an irrevocable trust correctly under the New York Estates, Powers and Trusts Law (EPTL), without tripping over the mistakes that quietly undo the whole plan.
Morgan Legal Group works with clients across all of New York — New York City, Long Island, Westchester, the Hudson Valley, and Upstate. The statutes below apply statewide, so wherever you sit in New York, the framework is the same.
First: Is an Irrevocable Trust Even the Right Tool?
Before you sign anything, confirm the goal. An irrevocable trust generally cannot be amended or revoked once executed, so it is the wrong choice if flexibility is your priority. It is the right choice when you are trying to accomplish one or more of these:
- Reduce New York estate tax by moving assets out of your taxable estate.
- Protect assets from future creditors or lawsuits.
- Plan for Medicaid — but only with eyes open to the 5-year look-back.
- Provide for a disabled loved one without destroying their benefits (see Special Needs Trust).
If you mainly want to avoid probate, keep your affairs private, and manage incapacity — and you still want to stay in control — a revocable living trust is usually the better fit. A revocable trust does not save estate tax, because those assets remain in your taxable estate, but it is far more flexible. Compare the broader menu on our trusts overview page.
Quick Decision Checklist
| If your priority is… | The likely tool | Why |
|---|---|---|
| Estate-tax reduction | Irrevocable trust | Removes assets from the taxable estate |
| Asset protection from creditors | Irrevocable trust | Assets are no longer “yours” to reach |
| Medicaid eligibility (long-term care) | Irrevocable trust (plan early) | Subject to the 5-year look-back |
| Keeping control + avoiding probate | Revocable trust | You stay grantor with full power to amend |
| Protecting a disabled beneficiary’s benefits | Special Needs Trust | EPTL 7-1.12 preserves Medicaid/SSI |
New York trusts are governed by EPTL Article 7. That article — not guesswork — defines what a valid trust looks like in this state.
Step 1 — Define the People and the Purpose
Every irrevocable trust needs three roles clearly identified:
- Grantor (settlor) — the person creating and funding the trust.
- Trustee — the person or institution who holds and manages the assets. Choose carefully; the trustee carries real legal duties (see Step 4).
- Beneficiaries — who benefits, and on what terms (now, at a future date, or at your death).
In an irrevocable trust, the grantor typically should not also serve as sole trustee with broad control, because retained control can pull the assets back into your taxable estate and defeat the purpose. This is the single most common drafting error we correct.
Checklist:
- [ ] Identify a trustee (and a successor trustee).
- [ ] Define beneficiaries and distribution terms.
- [ ] Decide what powers you keep vs. give up — this drives the tax result.
- [ ] Match the structure to your goal (tax, asset protection, or Medicaid).
Step 2 — Draft the Trust Under EPTL Article 7
The trust instrument must be properly drafted and executed to be valid in New York. This is where the irrevocable nature matters most: get the terms right the first time, because you generally can’t rewrite them later.
Key drafting decisions include whether the trust is a grantor or non-grantor trust for income-tax purposes, how principal and income are distributed, and what powers (if any) a “trust protector” or independent party may exercise. These are not boilerplate choices — they determine whether your estate-tax, asset-protection, or Medicaid goal is actually achieved.
Checklist:
- [ ] Trust drafted to your specific goal (not a generic template).
- [ ] Executed with the formalities required under New York law.
- [ ] Successor trustee and contingency terms included.
- [ ] Companion documents reviewed (will, power of attorney, health care proxy).
Step 3 — Fund the Trust (The Step Everyone Forgets)
A trust controls only the assets actually transferred into it. An unfunded irrevocable trust is just paper. Funding is where the legal benefit becomes real — and where the Medicaid clock starts.
Funding means retitling assets into the name of the trust:
- Real estate — deed transferred to the trustee.
- Bank and brokerage accounts — retitled or assigned to the trust.
- Other assets — business interests, certain investments, life insurance, depending on the plan.
Critical timing point: if Medicaid is a goal, the 5-year look-back runs from the date assets are transferred into the irrevocable trust — not from the date you sign it. Transfers made within five years of applying for Medicaid long-term care can trigger a penalty period. The lesson is simple: plan early. Waiting until a health crisis hits usually means the look-back has not run.
Checklist:
- [ ] Real property deeded to the trust.
- [ ] Financial accounts retitled.
- [ ] Beneficiary designations reviewed and coordinated.
- [ ] Funding date documented (this starts the look-back clock).
Step 4 — Understand the Trustee’s Legal Duties
Once funded, the trustee steps into a fiduciary role with binding obligations under New York law:
- Prudent-investor standard — the trustee must invest and manage trust assets prudently under the New York Prudent Investor Act, EPTL Article 11-A.
- Duty of loyalty — the trustee must act solely in the beneficiaries’ interest, never self-dealing.
- Duty to account — the trustee must keep records and account to the beneficiaries for what comes in, what goes out, and what is held.
These duties are why naming a trustee is a serious decision and why ongoing administration matters. If you are stepping into a trustee role now, our trust administration page walks through the practical mechanics. New York’s SCPA and EPTL also contain commission schedules that govern what a trustee may be paid — the exact figures depend on the schedule and the assets, so confirm them rather than assume.
Step 5 — Confirm the Estate-Tax Math for 2026
This is often the whole reason families build an irrevocable trust. Here are the verified 2026 New York numbers:
| New York Estate Tax — 2026 | Amount |
|---|---|
| Basic exclusion amount | $7,350,000 |
| “Cliff” threshold (105% of exclusion) | $7,717,500 |
New York has a notorious estate-tax cliff. If your taxable estate exceeds the cliff of $7,717,500, you don’t just lose the exemption on the excess — you lose the entire exemption, and the estate is taxed from the first dollar. Estates that land near or just over the cliff can face a dramatically higher tax bill than estates just under it. An irrevocable trust is one of the primary tools used to move assets out of the taxable estate and stay below that line.
By contrast, a revocable trust does nothing here — its assets remain fully in your taxable estate.
Step 6 — Coordinate With the Rest of Your Plan
An irrevocable trust is rarely a standalone document. It works alongside your will, your power of attorney, and your health care proxy. Remember the core distinction: a trust avoids probate and stays private, while a will is a public document that must be probated in the Surrogate’s Court. That privacy and probate-avoidance is a major reason families layer trusts into their plans. We break down the tradeoffs on our trust vs. will page.
Final checklist:
- [ ] Will updated to coordinate with the trust.
- [ ] Power of attorney and health care proxy current.
- [ ] Funding completed and documented.
- [ ] Trustee briefed on fiduciary duties.
- [ ] Plan reviewed periodically as laws and assets change.
Frequently Asked Questions
Can I change my mind after creating an irrevocable trust in New York?
Generally, no — that is the defining feature. An irrevocable trust normally cannot be amended or revoked, which is exactly what gives it estate-tax and asset-protection power. Some flexibility can be built in at drafting through trustee/trust-protector provisions, which is why getting the terms right up front is essential.
Does an irrevocable trust really lower my New York estate tax?
It can, by removing assets from your taxable estate. With the 2026 basic exclusion at $7,350,000 and the cliff at $7,717,500 — where estates over the cliff lose the entire exemption — moving assets below the line can produce substantial savings. A revocable trust does not have this effect.
How does the 5-year Medicaid look-back affect funding?
The look-back runs from the date you transfer assets into the irrevocable trust. Transfers made within five years of a Medicaid long-term-care application can create a penalty period, so families who want Medicaid protection generally need to fund the trust well before care is needed.
What does my trustee actually have to do?
A New York trustee must invest prudently under the Prudent Investor Act (EPTL Article 11-A), act with undivided loyalty to the beneficiaries, and account to them for the trust’s activity. These are enforceable fiduciary duties, not suggestions.
What if my beneficiary receives government benefits?
Use a supplemental/special needs trust under EPTL 7-1.12. It lets you provide for a disabled beneficiary without disqualifying them from means-tested programs like Medicaid and SSI.
Ready to map out the right structure for your family and your goals? Schedule a consultation with attorney Russel Morgan, Esq.
For the underlying law, see the New York EPTL on the New York State Senate site and New York estate-tax guidance at tax.ny.gov.
Further reading from Morgan Legal Group: how an irrevocable trust works.