Why Set Up a Trust? Nine of the Most Common Reasons

“I’m not rich. Why would I need a trust?” We hear this question all the time. In fact, most New York families set up trusts not to save taxes, but to save time, spare their families hassle and avoid conflict. Here are nine of the most common reasons. See if any of them describe you.

I’m Not Wealthy. Do I Still Need a Trust?

Whether you need one depends less on how much you have and more on your family situation. Owning a home in New York, having children, having relatives overseas or worrying about illness in old age can each be a reason.

Reason 1: Spare Your Family From Probate

In New York, when someone dies owning property in their own name, the family usually has to go through probate or administration in Surrogate’s Court:

A petition and death certificate must be filed with the court;
All legal heirs must be located (even those who get nothing under the will), and either sign notarized waivers or be formally served with a citation by the court;
Until the court issues its authority (called “letters”), bank accounts generally cannot be accessed and the house cannot be sold;
The process often takes several months to more than a year.

Property held in a trust generally does not go through this process. The successor trustee can handle it directly.

Reason 2: Relatives Overseas Make Probate Harder

Many families have parents or siblings abroad. If probate is required, those relatives’ signed consents often need to be notarized locally and then authenticated. China, for example, joined the Hague Apostille Convention effective November 7, 2023, which simplifies authentication, but it still takes time. A trust greatly reduces the need for signatures from overseas relatives.

Reason 3: Someone Can Legally Step In If You Become Ill

If you have a stroke or develop dementia with no plan in place, your family may have to ask a court to appoint a guardian under Article 81 of the Mental Hygiene Law. Guardianship is slow and expensive, and it requires ongoing reports to the court.

With a trust, the successor trustee you chose can take over trust property directly, without going to court. (Assets outside the trust still require a power of attorney; see Part 17.)

Reason 4: Control When and How Your Children Receive Money

Minors cannot manage inherited property themselves. Without a trust, the money may be held under court supervision, and your child may receive everything at once at age 18 or 21.

A trust lets you decide, for example:
- The trustee pays for tuition, medical care and living expenses;
- One-third at age 25, another third at 30 and the rest at 35;
- Or the money stays in trust to protect your child from divorce, creditors or bad habits.

Reason 5: Protect a Family Member With Special Needs

If a family member with a disability receives government benefits such as SSI or Medicaid, leaving money to them directly may cost them their eligibility. A supplemental needs trust (EPTL §7-1.12) can improve their quality of life without disqualifying them.

Reason 6: Second Marriages and Blended Families

A common worry in second marriages: “If I die first and my spouse inherits the house, will my spouse leave it all to their own children?” A trust can say that your spouse may live in and use the property for life, and whatever remains then goes to your children.

Reason 7: New York Estate Tax

In 2026, the New York estate tax exclusion is $7,350,000 per person, far below the federal exemption of $15,000,000. New York also has a “cliff”: if the taxable estate exceeds 105% of the exclusion ($7,717,500 in 2026), the exclusion disappears entirely and the estate is taxed from the first dollar. And New York does not allow a surviving spouse to use a deceased spouse’s unused exclusion.

For married couples whose combined assets (including real estate, retirement accounts and life insurance proceeds) approach these numbers, trusts can help each spouse make full use of the exclusion.

Reason 8: Long-Term Care and Medicaid Planning

Nursing home care in New York can cost well over $10,000 a month. With an irrevocable Medicaid asset protection trust, once the requirements are met and the five-year look-back period has passed, the home and other assets in the trust are generally not counted for nursing home Medicaid eligibility. (A regular revocable trust cannot do this; see Part 5.)

Reason 9: Privacy

Once a will is admitted to probate, it becomes a public record. Anyone can look up what you owned and who received it. A trust generally stays private.

What a Trust Cannot Do

The limits matter as much as the benefits:

A revocable trust does not protect you from your own creditors. Under New York law, a trust created for your own benefit is void as against your creditors (EPTL §7-3.1).
A revocable trust does not help you qualify for Medicaid. The assets are still counted as yours.
A trust by itself does not reduce your income taxes.
A trust requires upfront cost, funding work and ongoing maintenance.

Should You Consider a Trust?

If any of the following apply, it is worth a conversation with an attorney:

You own real estate in New York or another state (including a co-op);
You have minor children, or you would rather your children not receive a large sum all at once;
You have relatives overseas or assets abroad;
You are over 60 and concerned about long-term care costs;
A family member has a disability or special needs;
You are in a second marriage or blended family;
Your total assets are approaching the New York estate tax threshold;
You value privacy and want to spare your family future hassle.

Attorney’s perspective

At a first meeting, I usually don’t start by asking how much you own. I ask what you worry about most for your family. Which of these nine reasons matters most to you determines what kind of trust we design.

For advice about your own family’s situation, call +1 718-218-5805 or schedule a consultation. We meet clients in Flushing and Manhattan, in English or Chinese.

Series overview

This article is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. For advice about your situation, please contact us.

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