New York EPTL Laws: Decoding Revocable and Irrevocable Trusts for Estate Planning in 2024

Navigating New York Trust Law: A Primer on Revocable and Irrevocable Trusts

At White Plains Apostille & Mobile Notary, we’re often asked to help finalize Last Will & Testaments and Trusts. When the subject of Trusts arises from clients who have used Legal Zoom or other online services, they often find themselves confused about the next steps and the intricacies of trust law in New York State.

It’s important to note that while we are happy to provide general information and guidance, we cannot offer legal or estate planning advice. Our role is to assist with the notarization and apostille process, ensuring that your documents are properly executed and authenticated for use in New York or internationally.

However, we understand that navigating the world of trusts can be complex and overwhelming, especially for those who have used online services without the benefit of personalized legal counsel. To help clarify some of the key concepts, we’ve prepared a primer on how Trusts are defined and interpreted in New York under the Estates, Powers, and Trusts Law (EPTL).

This article will explore the fundamental differences between revocable and irrevocable trusts, their implications for asset protection and estate planning, and the relevant provisions of the EPTL that govern their creation and administration. We’ll also discuss important considerations, such as the impact of look-back periods on Medicaid eligibility and the role of clear trust language in determining revocability.

While this information is intended to provide a general overview of trust law in New York, it is not a substitute for the advice of a qualified estate planning attorney. Every individual’s situation is unique, and the decision to create a revocable or irrevocable trust should be made in consultation with a legal professional who can assess your specific needs and goals.

At White Plains Apostille & Mobile Notary, we are committed to providing our clients with the highest level of service and support. If you have any questions about the notarization or apostille process for your trust documents, please don’t hesitate to reach out to our knowledgeable team. We are here to help ensure that your documents are properly executed and ready for use, while empowering you with the information you need to make informed decisions about your estate planning needs.

Protecting Your Assets: Understanding Revocable and Irrevocable Trusts in New York

In New York State, the choice between a revocable and irrevocable trust depends on various factors, including the grantor’s desire for control, asset protection, and potential estate tax implications. The Estates, Powers, and Trusts Law (EPTL) provides the legal framework for trusts in New York, with EPTL § 7-1.16 governing revocable trusts and EPTL § 7-1.17 addressing irrevocable trusts.

Revocable Trusts (EPTL § 7-1.16): Revocable trusts, also known as living trusts, allow grantors to maintain control over the trust assets during their lifetime. Grantors can amend, modify, or revoke the trust at any time, providing flexibility in estate planning (EPTL § 7-1.16(a)). Upon the grantor’s death, the trust becomes irrevocable (EPTL § 7-1.16(b)). However, revocable trusts offer limited asset protection, as creditors can access trust assets (EPTL § 7-3.1). Moreover, assets in a revocable trust are considered part of the grantor’s estate for tax purposes, offering no estate tax advantages.

Irrevocable Trusts (EPTL § 7-1.17): Irrevocable trusts require grantors to relinquish control and ownership of the assets placed in the trust. Once the trust is created, it cannot be easily modified or terminated, even by the grantor (EPTL § 7-1.17(a)). This loss of control provides significant asset protection from creditors, as the assets are no longer considered part of the grantor’s estate (EPTL § 7-3.1). Additionally, irrevocable trusts may offer estate tax benefits, as the assets are removed from the grantor’s taxable estate.

Creditor Protection and Look-Back Periods: Irrevocable trusts offer greater protection from creditors and lawsuits compared to revocable trusts. However, it is crucial to consider the timing of asset transfers to an irrevocable trust. Certain institutions, such as nursing homes and Medicaid, employ “look-back” periods to determine eligibility for benefits. In New York, the look-back period for Medicaid is 60 months (N.Y. Soc. Serv. Law § 366(5)(e)(1)(vi)). Transfers made to an irrevocable trust within this period may be subject to penalties or disqualification from benefits.

Case Law: In re Klingenstein’s Estate, 6 Misc. 2d 122 (Sur. Ct. Westchester County 1957), emphasizes the significance of clear trust language in determining revocability. The absence of explicit language establishing revocability leads to an irrevocable interpretation. This case highlights the importance of carefully drafting trust documents to ensure they accurately reflect the grantor’s intentions.

In re Mordecai’s Estate, 24 Misc. 2d 668 (Sur. Ct. Westchester County 1960), reaffirms the grantor’s power to revoke a trust unless it is expressly made irrevocable. This case underscores the default presumption of revocability under New York law, absent clear language to the contrary.

Choosing the appropriate trust depends on the grantor’s unique circumstances, objectives, and risk tolerance. Revocable trusts offer flexibility and control during the grantor’s lifetime, while irrevocable trusts provide enhanced asset protection and potential estate tax benefits. However, the decision to create an irrevocable trust should be carefully considered, as the loss of control and difficulty in modifying the trust may outweigh the potential advantages.