Planning for the future often means making important choices about how to protect your assets and provide for your loved ones. One of the most effective tools in estate planning is a trust, but not all trusts are created equal. While both revocable and irrevocable trusts can help you manage your estate and ensure a smoother transfer of assets, they work in very different ways. Understanding these differences is the first step toward deciding which trust best fits your goals and circumstances.
If you’re considering setting up a trust, working with an experienced Central New York revocable living trust lawyer can give you the clarity and guidance you need. The team at Davies Law Firm has helped countless families understand their options and create trusts that align with their financial and personal priorities. To learn more about whether a revocable or irrevocable trust is right for you, call Davies Law Firm today at (315) 472-6511 to schedule a telephone conference.
Understanding the Basics: The Three Key Roles in Any Trust
Before exploring the differences between revocable and irrevocable trusts, it is important to understand the structure they both share. Every trust involves three essential roles that determine how the trust is created, managed, and ultimately distributed.
The Trustor
The trustor (sometimes called the “settlor” or “grantor”) is the individual who establishes the trust. This person decides which assets will be placed into the trust and sets the rules for how those assets should be managed or distributed. In estate planning, the trustor’s motivations often include controlling wealth during their lifetime, providing for loved ones, minimizing taxes, or preparing for long-term care needs.
The Trustee
The trustee is the individual (or in some cases, a professional fiduciary or financial institution) who takes on the legal responsibility of managing the trust’s assets. Trustees are bound by a fiduciary duty, which means they must always act in the best interests of the beneficiaries and in accordance with the terms of the trust document. Their responsibilities can include:
- Managing investments and preserving the trust’s value
- Paying bills and taxes on behalf of the trust
- Filing required reports and returns
- Distributing income or principal to beneficiaries as directed
Choosing a trustee is one of the most critical decisions in trust planning. A trustworthy, financially savvy, and impartial person (or institution) is essential to ensure the trust functions smoothly and fairly.
The Beneficiary
The beneficiary is the person, group of people, or organization that the trust is designed to benefit. Beneficiaries may receive income generated by the trust during the trustor’s lifetime, inherit principal after the trustor’s death, or both. The terms established by the trustor determine how and when distributions occur, whether immediately, over time, or upon meeting certain conditions.
The relationship among these three parties gives each type of trust its defining features. In a revocable living trust, the trustor often serves simultaneously as the trustee and the primary beneficiary during their lifetime. This structure allows the trustor to maintain control over the assets while alive, but it also means that those assets remain legally connected to them, offering no asset protection or tax advantages.
Only upon the trustor’s incapacity or death do these roles separate. A successor trustee then takes over management of the trust, and the designated beneficiaries begin to receive the benefits. In contrast, with an irrevocable trust, the trustor gives up control and cannot serve all three roles, creating stronger protections and potential tax benefits.
Central New York Revocable Living Trust Lawyers – Davies Law Firm
Frederick P. Davies
Frederick P. Davies is the founder and senior attorney of the Davies Law Firm, P.C., and a highly experienced revocable living trust lawyer in Central New York. With more than 30 years of experience, Mr. Davies focuses his practice on estate planning, wills, trusts, probate, long-term care, and Medicaid planning. A graduate of Syracuse University College of Law, he is admitted to practice before the U.S. Supreme Court, U.S. Tax Court, and state courts in both New York and Connecticut. His distinguished service as a Judge Advocate in the U.S. Navy and later with the Air National Guard gave him extensive trial experience and sharpened his skills in estate and tax law.
Mr. Davies has delivered over 1,000 seminars on estate planning, living trusts, and elder law topics, making him a recognized authority in the field. He is a member of the American Bar Association, the New York State Bar Association, and the Estate Planning Council of Central New York. Through his firm, he is dedicated to guiding families with personalized strategies that protect assets, reduce tax burdens, and provide peace of mind for future generations.
William P. Davies
William P. Davies is a partner at the Davies Law Firm, P.C., and a skilled revocable living trust lawyer serving Central New York. Licensed in both New York and Florida, he helps families protect their legacies with tailored estate plans, including trusts, tax strategies, and probate guidance. He graduated magna cum laude from Albany Law School and went on to earn an advanced L.L.M. in Estate Planning from the University of Miami. His background includes serving as a law review editor, publishing widely on estate law, and contributing to the commentary on New York’s Power of Attorney.
Known for his detail-oriented approach, Mr. Davies has become a trusted Central New York revocable living trust lawyer for individuals and families seeking asset protection and long-term planning solutions. He has spoken at statewide legal conferences and served as President of the Estate Planning Council of Central New York, furthering his commitment to excellence in trust and estate law. Clients value his approachable style, in-depth knowledge, and dedication to creating customized estate plans that secure both assets and peace of mind.
The Revocable Living Trust: The Foundation of Flexibility and Control
A revocable trust, often referred to as a “revocable living trust,” is one of the most widely used estate planning tools in New York. Created during the trustor’s lifetime, its hallmark feature is flexibility. The trustor retains the right to amend the trust, add or remove assets, change beneficiaries, or even dissolve it entirely at any time while alive and legally competent. Under New York’s Estates, Powers and Trusts Law (EPTL), however, a lifetime trust is presumed to be irrevocable unless the trust document clearly states that it is revocable. This makes precise drafting of the trust agreement critically important.
Primary Benefits in New York
For many New Yorkers, a revocable living trust serves as the foundation of an effective estate plan. It provides several key advantages that go beyond what a simple will can achieve.
Avoiding Probate
One of the most significant benefits of a revocable trust is its ability to bypass probate. Probate is the court-supervised process of validating a will, paying debts, and distributing assets through the Surrogate’s Court. In New York, probate can be slow, costly, and public. By contrast, assets properly titled in the name of a revocable trust are not considered part of the probate estate. When the trustor passes away, the successor trustee can immediately manage and distribute those assets to beneficiaries according to the trust’s instructions, without court involvement. This ensures a faster, more efficient, and private transfer of wealth.
Managing Assets During Incapacity
A revocable trust also provides vital protection if the trustor becomes incapacitated. Should the trustor lose the ability to manage their finances due to illness or disability, the successor trustee named in the trust can step in to manage the assets without interruption. This avoids the need for a formal guardianship proceeding, which is often time-consuming, expensive, and invasive. Instead, the trustor’s finances continue to be managed by someone of their own choosing, maintaining privacy and continuity.
Ultimate Flexibility
Life circumstances rarely remain the same. A revocable trust can be adjusted as family dynamics, financial conditions, or long-term goals change. Beneficiaries can be added or removed, assets can be retitled, and distribution terms can be updated as needed. This adaptability is one of the main reasons revocable trusts are so popular. Estate planning attorneys often recommend reviewing the trust every three to five years to ensure that it continues to reflect the trustor’s wishes.
Crucial Limitations
Although a revocable trust offers valuable benefits, it is not a perfect solution. There are important limitations that anyone considering one must keep in mind.
No Asset Protection
Because the trustor maintains full control and can revoke the trust at any time, the law continues to treat the trust assets as if they belong to the trustor personally. As a result, assets in a revocable trust remain subject to creditors, legal judgments, and lawsuits. A revocable trust does not shield property from financial liability.
No New York Estate Tax Savings
For the same reason, tax authorities do not consider assets in a revocable trust as being outside of the trustor’s estate. Both the Internal Revenue Service and the New York State Department of Taxation and Finance treat the assets as taxable. Placing assets in a revocable trust does not reduce estate taxes and provides no tax advantages.
The Critical Step of Funding
A revocable trust is effective only if it is properly funded. This means the trustor must legally transfer ownership of assets into the trust. Funding may involve:
- Executing and recording a new deed for real estate
- Changing the ownership of bank or brokerage accounts
- Retitling vehicles or other assets into the trust’s name
Without proper funding, the trust remains an empty legal framework. Assets left outside the trust may still need to go through probate, defeating one of the primary purposes of creating the trust in the first place.
At Davies Law Firm, funding is not treated as an additional or optional service. When you establish a trust as part of your estate plan with us, our team ensures that your assets are properly transferred and titled in the name of your trust. This comprehensive approach provides peace of mind, knowing that your estate plan is both complete and effective from the start.
The Irrevocable Trust: The Ultimate Tool for Protection and Preservation
Unlike a revocable trust, an irrevocable trust cannot generally be amended or revoked once it has been created. When a trustor transfers assets into an irrevocable trust, they give up ownership and control over those assets. The trust itself becomes the legal owner, with a trustee managing the property for the benefit of the named beneficiaries. While this loss of control is significant, it is the very feature that unlocks benefits and protections unavailable with a revocable trust. In New York, the decision to use an irrevocable trust is often not just a matter of preference but a deliberate strategy to respond to the state’s strict financial rules and tax policies.
Powerful Benefits Specific to New York
For individuals with substantial wealth or high-liability concerns, an irrevocable trust can be a powerful shield against risks and regulations unique to New York.
Strategic Medicaid Planning for Long-Term Care
The cost of nursing home care in New York is among the highest in the country and can quickly deplete even large estates. Medicaid is the government program that helps cover these costs, but eligibility requires meeting strict income and asset limits. A Medicaid Asset Protection Trust (MAPT), which is a specialized form of irrevocable trust, is the most effective legal tool for protecting assets while still qualifying for benefits.
When assets are transferred into a MAPT, they are no longer counted as part of the individual’s resources for Medicaid eligibility. However, timing is critical. New York applies a 60-month (five-year) look-back period for nursing home applications. This means that Medicaid will review all financial transfers made within the previous five years. If transfers to the trust are found within that period, the applicant may face a penalty and a period of ineligibility for benefits. Because of this rule, establishing a MAPT as early as possible is essential for anyone concerned about future long-term care costs.
Strong Asset Protection
Removing assets from the trustor’s personal ownership allows an irrevocable trust to protect those assets from future creditors, lawsuits, and legal judgments. Once assets are properly transferred into the trust (and assuming the transfer was not intended to defraud existing creditors), they are generally beyond the reach of personal liabilities that may arise later. This makes irrevocable trusts especially valuable for professionals in high-risk fields such as medicine, law, or business ownership, where personal wealth could otherwise be exposed to claims.
Minimizing New York Estate Taxes and Avoiding the “Cliff”
One of the most compelling reasons New Yorkers turn to irrevocable trusts is to minimize estate tax liability. While the federal estate tax exemption is very high, New York has a much lower exemption. For 2025, the New York State estate tax exemption is $7.16 million. Assets transferred into a properly structured irrevocable trust are excluded from the taxable estate, reducing or potentially eliminating state estate taxes.
This planning is especially important because of New York’s unique “estate tax cliff.” If an estate’s value is within the exemption amount, no estate tax is due. However, if the estate exceeds the exemption by more than 5 percent (roughly $7.518 million in 2025), the entire exemption is lost. The estate tax is then imposed on the full value of the estate, not just the amount over the threshold. This sudden jump can result in hundreds of thousands of dollars in unexpected taxes. An irrevocable trust is one of the primary tools used to keep estate values below this cliff.
It is also important to note that while New York does not impose a gift tax, taxable gifts made within three years of death are added back into the estate for tax purposes. This rule underscores the importance of planning early and making transfers to an irrevocable trust well in advance.
The Essential Trade-Off
The benefits of an irrevocable trust come with a significant trade-off: the trustor must permanently give up control of the assets transferred. Once property is placed in the trust, it cannot simply be taken back, and the terms of the trust cannot easily be changed. For this reason, irrevocable trusts require careful consideration and long-term planning. The decision should be made with confidence that the assets placed in the trust will not be needed for personal use in the future.
Which Trust Aligns with Your Objectives?
When considering trusts, it’s not about choosing which type is better, but rather how each can serve your overall estate planning strategy. The right combination depends on your unique goals and circumstances.
The Revocable Trust: The Foundation of Your Estate Plan
A revocable trust is typically the starting point for most individuals and families. It offers flexibility, privacy, and control by allowing you to manage your assets freely during your lifetime while avoiding the delays and expenses of probate after your passing. It also ensures continuity if you become incapacitated by empowering a successor trustee to step in without the need for court involvement.
In short, a revocable trust serves as your comprehensive estate plan, providing structure and peace of mind that your assets will be managed and distributed according to your wishes, both during your life and after.
The Irrevocable Trust: An Additional Planning Tool for Long-Term Care
An irrevocable trust is an optional layer of planning that becomes relevant when you want to protect assets in preparation for potential long-term care needs. When structured as a Medicaid Asset Protection Trust, it can help preserve your wealth while allowing you to qualify for government assistance with nursing home or assisted living expenses.
Timing is essential because transfers to this type of trust generally need to occur at least five years before applying for Medicaid to avoid penalties. For families concerned about future care costs, establishing an irrevocable trust early can help secure both financial stability and peace of mind.
| Trust Type | Key Features | When It’s Useful |
|---|---|---|
| Revocable Trust | You retain full control, can change or revoke it. Avoids probate and allows for incapacity planning. Assets remain part of your taxable estate and are not protected from creditors. | Best as a foundation estate planning tool when you want flexibility and control. |
| Irrevocable Trust | You give up control and cannot easily change it. Offers asset protection, potential estate tax benefits, and helps with long-term care qualification. Must be set up in advance. | Useful when planning for long-term care, protecting wealth, or reducing estate tax exposure. |
Take the Next Step Toward Protecting Your Future
Choosing between a revocable and irrevocable trust is not a one-size-fits-all decision. The right option depends on your goals, your assets, and your long-term plans for your family. Having an experienced legal team on your side ensures that your trust is structured correctly and truly meets your needs.
At Davies Law Firm, we are dedicated to helping individuals and families across Central New York create estate plans that provide clarity, security, and peace of mind. If you’re ready to explore your trust options and decide which approach is right for you, call (315) 472-6511 today to schedule a telephone conference.
