Most trust problems we see at Morgan Legal Group are not exotic. They are ordinary, avoidable mistakes — an unfunded trust, the wrong type of trust for the goal, a missed Medicaid look-back, or a beneficiary designation that quietly overrides the plan. This FAQ is built around those pitfalls. It explains how New York trusts actually work under the Estates, Powers and Trusts Law (EPTL), and where careful families go wrong. We serve clients across New York State — NYC, Long Island, Westchester, the Hudson Valley, and Upstate.
For a deeper walkthrough of each instrument, start with our trusts overview.
Quick-reference: the trust most people choose, and the mistake that undoes it
| Trust type | Primary purpose | Most common costly mistake |
|---|---|---|
| Revocable living trust | Avoid probate, privacy, incapacity management | Never funding it (titling assets into it) |
| Irrevocable trust | Estate-tax reduction, asset protection, Medicaid | Triggering the 5-year look-back too late |
| Supplemental/Special needs trust (SNT) | Preserve Medicaid/SSI for a disabled beneficiary | Leaving assets to the person outright instead |
| Will | Direct distribution of probate assets | Assuming it avoids probate (it does not) |
What law governs trusts in New York?
New York trusts are governed by the Estates, Powers and Trusts Law (EPTL), Article 7. Related rules — trustee investment standards, commissions, and accounting procedures — appear in the EPTL and the Surrogate’s Court Procedure Act (SCPA). The biggest mistake here is assuming “a trust is a trust.” The label matters: revocable and irrevocable trusts do very different jobs, and choosing the wrong one is the most expensive error of all.
What is a revocable living trust — and what is the #1 mistake with it?
A revocable living trust lets the grantor keep full control: you can amend or revoke it during your lifetime. Its core benefits are avoiding probate, privacy, and seamless incapacity management if you become unable to manage your affairs.
The #1 mistake is failing to fund the trust. A revocable trust only controls assets that are actually titled in its name. We routinely see beautifully drafted trusts sitting empty while the home, the brokerage account, and the bank accounts are still in the individual’s name — meaning they go through probate anyway, defeating the entire purpose. Learn how funding works on our revocable living trust page.
Second mistake: expecting a revocable trust to save estate tax. It does not. Because you retain control, the assets remain in your taxable estate. Tax planning requires a different tool.
What does an irrevocable trust do, and where do families get the timing wrong?
An irrevocable trust generally cannot be amended or revoked. You give up control in exchange for powerful benefits: estate-tax reduction, asset protection, and Medicaid planning.
The costly mistake here is the 5-year look-back. Transfers into a Medicaid-planning irrevocable trust are subject to a five-year look-back for nursing-home Medicaid eligibility. Families who wait until a health crisis to set one up often discover the look-back has not yet run, creating a penalty period. The lesson: irrevocable-trust planning rewards acting early, not in an emergency. See our irrevocable trust page for how the look-back is calculated.
How does a special needs trust protect benefits — and what’s the trap?
A supplemental (special) needs trust (SNT) under EPTL 7-1.12 holds assets for a disabled beneficiary without disqualifying them from means-tested benefits like Medicaid and SSI. The trap is heartbreaking and common: relatives leave money to the disabled person outright — in a will, a life-insurance beneficiary line, or a “to be fair” equal share. That inheritance can immediately disqualify the beneficiary from benefits they depend on. The fix is to route every gift, bequest, and beneficiary designation through a properly drafted SNT. Our special needs trust page explains the structure.
Trust vs. will — which one actually avoids probate?
This is where assumptions cost the most. A trust avoids probate and stays private. A will does not avoid probate — it must be filed and proved in the Surrogate’s Court, making it a public proceeding. A will is essential (it names guardians for minor children and catches anything left out of the trust), but if probate-avoidance and privacy are your goals, a will alone won’t deliver them. Compare them side by side on our trust vs. will page.
What are a New York trustee’s duties — and how do trustees get into trouble?
A trustee is a fiduciary. Under New York law a trustee must follow the prudent-investor standard (EPTL Article 11-A), observe a duty of loyalty (no self-dealing), and a duty to account to the beneficiaries. The recurring mistake is naming a well-meaning relative who doesn’t understand these duties — commingling funds, making concentrated or speculative investments, or never producing an accounting. Each breach can expose the trustee to personal liability. If you serve as trustee, our trust administration page outlines what’s required.
What is the New York estate tax in 2026 — and what is the “cliff”?
For 2026, the New York basic exclusion amount is $7,350,000. Estates below that pay no New York estate tax. The dangerous feature is the “cliff.” Once a taxable estate exceeds 105% of the exclusion — $7,717,500 — the exemption disappears entirely, and the whole estate is taxed, not just the amount over the line.
| 2026 New York estate-tax figure | Amount |
|---|---|
| Basic exclusion amount | $7,350,000 |
| Cliff threshold (105%) | $7,717,500 |
| Result above the cliff | Entire estate taxable — no exemption |
The mistake is ignoring the cliff because you’re “only a little over.” Falling just past $7,717,500 can cost dramatically more than staying just under it. Planning tools — including irrevocable trusts and lifetime gifting — can keep an estate on the safe side.
Do trustees get paid, and where do fee disputes start?
Yes. New York sets out commission schedules under the SCPA and EPTL for trustees and other fiduciaries. We won’t quote a specific number here, because the calculation depends on the trust’s terms, principal, and income — and because fee fights usually begin when families assume a number instead of reading the schedule and the trust document. Have the commission structure explained in writing before anyone agrees to serve.
What’s the single most common estate-planning mistake of all?
Treating the plan as “done” and never updating it. Marriages, divorces, new children, moves, and changing assets all break old plans. Beneficiary designations on retirement accounts and life insurance override your will and trust — so an outdated ex-spouse on a 401(k) beneficiary line can quietly inherit everything. Review your documents and beneficiary lines after every major life event.
Talk to a New York trusts attorney
The mistakes above are preventable with the right plan and proper funding. Morgan Legal Group — led by attorney Russel Morgan, Esq. — helps families across New York State build trusts that actually work when they’re needed.
Schedule a consultation with Russel Morgan, Esq.
This page is general information about New York law and is not legal advice. Statutes and exclusion amounts change; confirm current figures with the New York State Senate or tax.ny.gov before acting.
Further reading from Morgan Legal Group: how an irrevocable trust works.