Estate Planning for New York Property Owners - Part II

If New York Doesn’t Allow Beneficiary Deeds, What Can You Do?

In Part I, we explored Beneficiary Deeds (Transfer on Death deeds) and why they are such a streamlined tool for Colorado property owners. If you own property in the Empire State, however, you may have noticed a significant hurdle:

New York does not recognize Beneficiary Deeds.

While many states have adopted the Uniform Real Property Transfer on Death Act, New York remains a holdout. This doesn’t mean you are stuck with a long probate process; it just means your toolkit looks different. Here is how New York property owners can achieve the same—or better—results.

Why Beneficiary Deeds Don’t Exist in New York

New York law (specifically the EPTL—Estates, Powers and Trusts Law) is deeply rooted in traditional property transfers. As a result:

1)       There are no "Future" Deeds - you cannot record a deed today that only "activates" when you die.

2)       Any deed recorded during your lifetime is generally viewed as a transfer of a present interest.

3)       Attempting to create your own "informal" TOD deed can lead to a title nightmare for your heirs, often requiring a quiet title action to fix.

The Cost of Doing Nothing: New York Surrogate’s Court

If you die owning New York real estate in your individual name, your family must head to Surrogate’s Court. Unlike some states with "informal" probate, New York’s process can be:

1)       Slow, where even a simple probate can take 6 to 12 months (or longer in busy counties like Kings, Queens, or Nassau).

2)       Expensive: Legal fees, filing fees (which scale with the value of the estate), and executor fees add up quickly.

3)       Public: Your private property values and family dynamics become part of the public record.

For many families, avoiding or minimizing this process is a primary planning goal.

Common (but Risky) Approaches

Before discussing best practices, it is worth addressing the two most common approaches that often seem appealing but carry real risk.

1)       Adding a Child to the Deed. This is one of the most common mistakes. Problems include immediate gift tax consequences, loss of full control, exposure to the child’s creditors, lawsuits, or divorce, or a loss of a full step-up in tax basis. Once recorded, that ownership change is very real—and very hard to undo cleanly.

2)      “I’ll Just Use My Will”. A will does not avoid probate in New York. It only directs how the probate court distributes assets. If probate avoidance is the goal, a will alone is not sufficient.

The Most Common New York Alternatives

While New York does not allow Beneficiary Deeds, it does offer other tools that can be effective when used properly.

1. Revocable Living Trusts (The Closest Equivalent)

For New York real estate owners who want probate avoidance, a revocable living trust is often the most direct substitute. How it works:

a)       You create a trust during your lifetime

b)       You deed the property into the trust

c)       You remain trustee and retain full control

d)       At death, the successor trustee distributes or manages the property without probate

The benefits of such an approach are that it avoids probate, preserves privacy, allows detailed control over timing and distribution, and integrates cleanly with broader estate planning. For many New York clients, this is the gold standard solution.

2. Joint Ownership (Limited Use Cases)

Joint ownership can sometimes avoid probate, but it comes with tradeoffs. Common forms include:

a) Joint tenancy with right of survivorship

b) Tenancy by the entirety (for married couples)

While survivorship works automatically at death, joint ownership:

a) Creates present ownership rights

b) Can complicate refinancing or sale

c) Exposes the property to the co-owner’s liabilities

This approach works best in narrow, intentional situations—most commonly between spouses.

3. Life Estate by Deed

In New York, Life Estate Deeds are frequently used for Long-Term Care planning.

a) The Benefit: You keep the right to live in the home for life, but the "Remainder Interest" passes to your heirs automatically. This structure preserves the Step-up in Basis.

b) The Downside: You cannot sell or refinance the home without the written consent of your "remaindermen" (usually your children).

Tax Considerations Still Matter

The good news for New York property owners is that step-up in tax basis at death is generally preserved when property passes through an estate or trust. The bad news is that poorly structured lifetime transfers can trigger capital gains, create gift tax reporting obligations or lock in a low basis for heirs. This is another reason New York planning often favors trust-based solutions rather than deed-based shortcuts.

Choosing the Right Tool in New York

There is no one-size-fits-all solution, but these guiding questions help frame the analysis:

1)       Do you want to avoid probate?

2)       Do you need flexibility during your lifetime?

3)       Are there multiple beneficiaries or unequal shares?

4)       Do you want creditor or divorce protection for heirs?

5)       Is this part of a larger estate plan?

In New York, those questions often point toward a trust—not because it is trendy, but because it aligns with how New York law actually works.

Final Thoughts

New York’s refusal to adopt Beneficiary Deeds is frustrating for clients who want simplicity—but it also pushes planning toward more durable, intentional structures.

The key takeaway: Colorado favors deed-based simplicity and New York favors trust-based control. Both can work extremely well when used in the right context. If you own New York real estate and want to ensure a smooth transfer at death—without surprises for your family—it is worth spending time on the structure now rather than leaving it to Surrogate’s Court later.

If you would like help comparing options or coordinating New York planning with property in other states, I am happy to assist.