Irrevocable Trusts
Protecting Wealth Across Generations in New York

An irrevocable trust is a trust that, once created and funded, generally cannot be amended, modified, or revoked by the grantor without the consent of the beneficiaries and, in some cases, court approval. This is the fundamental distinction from a revocable living trust, which the grantor can freely amend or dissolve during their lifetime. The irrevocability is not a drawback — it is precisely what generates the legal benefits. Because the grantor relinquishes dominion and control over assets transferred to an irrevocable trust, those assets are no longer included in the grantor's taxable estate for New York and federal estate tax purposes.

Similarly, because the grantor no longer legally owns those assets, they are generally protected from the grantor's future creditors — subject to New York's fraudulent transfer rules — and from Medicaid's five-year lookback period once that period has elapsed. The trade-off is flexibility: unlike a revocable trust, the terms of an irrevocable trust are generally fixed at the time of creation, which is why careful upfront drafting by an experienced New York trust attorney is essential. Russel Morgan, Esq. structures irrevocable trusts with as much flexibility as the law permits, including provisions for trustee discretion, trust protector authority, and, where applicable, decanting rights under New York's trust decanting statute.

Morgan Legal Group drafts a comprehensive range of irrevocable trusts tailored to each client's specific goals. For Medicaid planning and long-term care asset protection, we prepare Medicaid Asset Protection Trusts (MAPTs). For life insurance planning and estate tax reduction, we draft Irrevocable Life Insurance Trusts (ILITs), which own life insurance policies outside the taxable estate so that death benefits pass to heirs free of estate tax. For married couples, we prepare Spousal Lifetime Access Trusts (SLATs). For sophisticated estate freezing strategies, we draft Grantor Retained Annuity Trusts (GRATs) and Qualified Personal Residence Trusts (QPRTs).

We also prepare charitable trusts — Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs) — for clients with philanthropic goals. Each trust type involves distinct tax, Medicaid, and asset protection trade-offs that Russel Morgan, Esq. carefully explains to ensure clients make fully informed decisions aligned with their family and financial objectives.

A Medicaid Asset Protection Trust (MAPT) is an irrevocable trust designed to shelter assets from being counted toward Medicaid eligibility while preserving them for family members. In New York, nursing home Medicaid requires an applicant to have countable assets below approximately $31,175 (2024 figure). Assets properly transferred to a MAPT are no longer counted as the grantor's assets once outside the five-year lookback period.

The MAPT is typically structured so that the grantor retains the right to income from trust assets during their lifetime — such as interest and dividends from invested assets, or the right to continue residing in a home held by the trust — while the trust principal passes to named beneficiaries free of Medicaid estate recovery. Key requirements for a New York MAPT include that it be truly irrevocable, that the grantor give up access to principal, and that the transfer be made more than five years before the Medicaid application date. Early planning is critical — the five-year lookback means the optimal time to create a MAPT is when the client is in reasonably good health. Morgan Legal Group counsels clients on the full spectrum of New York Medicaid planning strategies, integrating MAPT planning with wills, powers of attorney, and health care proxies.

While the name "irrevocable" implies permanence, New York law provides several mechanisms through which an irrevocable trust may be modified under appropriate circumstances. First, New York's trust decanting statute (EPTL §10-6.6) allows a trustee with discretionary distribution authority to "decant" trust assets into a new trust with modified terms without court approval in many circumstances. Decanting can be used to update administrative provisions, change trustee succession, or modify distribution standards, though it cannot eliminate a beneficiary's vested interest.

Second, all beneficiaries of an irrevocable trust may consent to modification under the doctrine of equitable deviation if unanticipated circumstances have arisen that would defeat the trust's purposes. Third, the Surrogate's Court may approve modification of an irrevocable trust under EPTL §7-1.9 or under the court's inherent equitable powers where circumstances have materially changed. Fourth, a trust protector — if named in the trust instrument — may have authority to modify certain provisions. Russel Morgan, Esq. discusses all available modification mechanisms with clients at the time of creation and when changed circumstances arise later.