Understanding Trust and Estate Planning with NYC’s Top Legal Experts

Understanding Trust and Estate Planning with NYC’s Top Legal Experts

For New York’s HNWIs, a simple will is not an estate plan. It’s a ticket to probate court. True estate planning is a sophisticated legal discipline designed to achieve three primary goals: 1) ensure your assets go *exactly* where you want, 2) protect your heirs from litigation and themselves, and 3) legally minimize the formidable Federal and New York State estate taxes.

This is where NYC’s top legal experts come in. At AZ New York, we see this not as “end-of-life” planning, but as “legacy” planning. It’s the final and most important act of stewardship for your wealth. This guide breaks down the core concepts you’ll discuss with your legal team.

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NYC’s Top Legal Experts (Trusts & Estates Law Firms)

These firms are the “blue chip” advisors for trust and estate planning. They don’t just draft documents; they act as long-term counselors to multi-generational families, often working hand-in-hand with the city’s top Multi-Family Offices. (Note: Many firms from our Asset Protection guide, like Schulte Roth & Zabel and Katten, are also leaders here).

1. Milbank: A global powerhouse with one of the most respected trust and estate practices in the world, serving UHNW clients and their private foundations.
2. Stroock & Stroock & Lavan: A historic NYC firm with a deeply respected private client group focused on tax-efficient wealth transfer.
3. Holland & Knight: A national leader with a large, top-ranked NYC-based private wealth services team.
4. Fox Rothschild: Known for its comprehensive practice that handles everything from estate planning to high-stakes trust and estate litigation (will contests).
5. Cleary Gottlieb Steen & Hamilton: An elite international firm that provides sophisticated, tax-focused estate planning for its UHNW clients.

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The Core Conflict: Revocable vs. Irrevocable Trusts

This is the most fundamental pedagogical concept in estate planning. Your lawyer’s first question will be about “control vs. protection.”

Feature	Revocable Living Trust	Irrevocable Trust
Core Purpose	Probate Avoidance & Management. A “will substitute” for managing assets during your life and after death.	Asset Protection & Tax Reduction. To move assets *out* of your estate for tax and liability purposes.
Can You Change It?	Yes. You can change or cancel it (“revoke” it) at any time. You maintain 100% control.	No (Generally). Once it’s signed and funded, it’s a permanent gift. You give up control.
Asset Protection?	None. Because you control it, a court considers the assets to be yours.	High. Assets are owned by the trust, not by you, protecting them from creditors.
Reduces Estate Tax?	No. The assets are 100% part of your taxable estate.	Yes. This is the primary reason they exist. The assets are *outside* your taxable estate.

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The Expert’s View: The Acronyms You Need to Know (The “Alphabet Soup”)

An initial meeting with a top NYC estate lawyer can feel like drowning in an alphabet soup of acronyms. These are the tools they use to save you millions.

• GRAT (Grantor Retained Annuity Trust): The classic “estate freeze.” You put an asset (like pre-IPO stock) into a short-term trust. The trust pays you back the initial value plus a small interest rate. All the *appreciation* (the massive growth) passes to your heirs 100% estate-tax-free.
• SLAT (Spousal Lifetime Access Trust): A modern tool where you make an irrevocable gift to a trust for your *spouse*. The assets are out of your estate, but your spouse can still access them if needed. It’s a way to get assets out of your estate “just in case.”
• ILIT (Irrevocable Life Insurance Trust): The solution to estate tax *liquidity*. You buy a large life insurance policy, but the *ILIT* owns it. When you pass away, the massive death benefit is paid 100% tax-free to the trust, giving your heirs the cash needed to pay any estate taxes without being forced to sell assets (like a family business or real estate).
• QTIP (Qualified Terminable Interest Property) Trust: The “second marriage” trust. It ensures your surviving spouse is taken care of for life, but dictates that when *they* pass away, the remaining assets go to *your* children (not their children or a new spouse).

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Real-World NYC Scenarios: Planning in Action

1. The “Dynasty” Trust

Profile: A UHNW family in the Upper East Side. They are not just wealthy; they are “old money.” Their primary goal is ensuring the family wealth lasts for 5+ generations.

The Strategy (Dynasty Trust): The law firm creates a “Dynasty Trust.” This trust is structured to last for many decades (or in perpetuity). It owns the family’s core assets, and the heirs are “beneficiaries,” not owners. They receive distributions but cannot sell the assets. This protects the wealth from divorce, lawsuits, and spendthrift heirs for generations.

2. The “NYS Estate Tax Cliff”

Profile: A couple in SoHo with a $7M net worth. They are well under the $13.6M *federal* exemption, so they think they are safe.

The Conflict: Their advisor warns them about the NYS “estate tax cliff” (which we cover in our tax guide). The NYS exemption is much lower (~$6.9M). If their estate grows to just 6% over that ($7.3M), their *entire* estate is subject to the NYS tax, not just the overage. The law firm creates a simple credit shelter trust to ensure the first $6.9M passes tax-free, saving the family hundreds of thousands.

3. The “Pre-IPO” Founder

Profile: A founder of a “Silicon Alley” startup. Her stock is valued at $5M today but is expected to be worth $100M after an IPO in 18 months.

The Strategy (The GRAT): This is the single best time to plan. A lawyer at a firm like Milbank executes a GRAT. The founder puts her $5M in stock into the trust. The trust owes her back ~$5.2M (the principal + interest) over two years. After the IPO, the stock is worth $100M. The trust pays her the $5.2M back, and the remaining $94.8 million passes to her children, completely free of gift and estate taxes. This move alone can save over $40M.

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Frequently Asked Questions (FAQ)

Q: What is “Probate”? Why do I want to avoid it?

A: Probate is the public, court-supervised process of validating a will and distributing assets. In NYC, it is notoriously slow (can take 1-2 years), expensive (legal fees), and 100% public. A Revocable Trust avoids probate entirely, keeping your assets and heirs private.

Q: What is the “Gift Tax”?

A: You have a lifetime “gift and estate tax exemption” ($13.61M per person in 2024). When you make an irrevocable gift (like funding a SLAT or GRAT), you use up a portion of this exemption. The goal of expert planning is to use this exemption *smartly* by gifting assets *before* they appreciate.

Q: What is a Health Care Proxy and Power of Attorney?

A: These are the most critical documents that are *not* about money. A Health Care Proxy names someone to make medical decisions for you if you are incapacitated. A Durable Power of Attorney names someone to make financial decisions for you. As the team at AZ New York always stresses, an estate plan without these is incomplete.

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