Asset Protection Trusts for Long Island Families and Business Owners
What an Asset Protection Trust Actually Does
An asset protection trust is a legal structure that places your assets beyond the reach of future creditors, lawsuits, and — in many cases — long-term care spend-down requirements. Unlike a basic revocable living trust, which offers no creditor protection because you retain full control, an asset protection trust is designed with legal distance between you and the assets it holds. That distance is what creates the shield.
These trusts are not a loophole or an aggressive tax strategy. They are a well-established planning tool used by families, professionals, and business owners who want to preserve what they have built against risks they cannot fully predict. Done correctly and early enough, an asset protection trust can be one of the most durable structures in a complete estate plan.
How Asset Protection Trusts Work Under New York Law
New York does not currently authorize self-settled domestic asset protection trusts — meaning you generally cannot be both the person who creates the trust and a beneficiary of it while still claiming creditor protection. This is an important distinction from states like Nevada, Delaware, and South Dakota, which do permit this structure.
Our team helps clients navigate this landscape in several ways. For New York residents, we often use irrevocable Medicaid Asset Protection Trusts (MAPTs), which are designed to remove assets from your countable estate for Medicaid purposes after the applicable look-back period. For clients seeking broader creditor protection, we evaluate whether a domestic asset protection trust established in a favorable jurisdiction makes sense, or whether a combination of New York-compliant irrevocable trust structures, LLCs, and other tools achieves the same goal.
Every plan is built around your specific assets, your risk profile, and your long-term goals — not a generic template.
Asset protection trusts are not only for the ultra-wealthy. On Long Island, we work with a wide range of families and individuals for whom this planning makes sense:
- Business owners and professionals in high-liability fields, including physicians, contractors, and real estate investors
- Families with significant real estate holdings in Nassau or Suffolk County
- Older adults concerned about Medicaid eligibility and the cost of long-term care
- Blended families managing competing inheritance interests
- High-net-worth individuals with estate and income tax exposure
- Parents of a child with special needs who want to preserve assets without affecting benefit eligibility
If you have assets worth protecting and a creditor risk worth worrying about, the conversation is worth having.
Who Needs an Asset Protection Trust on Long Island?
The Difference Between a Revocable and an Irrevocable Trust
This distinction matters more than most people realize. A revocable living trust is an excellent estate planning tool — it avoids probate, organizes your assets, and makes administration far easier for your family. But because you can change or revoke it at any time, courts and creditors treat it as if the assets are still yours. It offers no protection against lawsuits, judgments, or Medicaid spend-down.
An irrevocable trust gives up some flexibility in exchange for legal protection. Once assets are transferred in, you generally cannot take them back — and that permanence is precisely what makes the structure defensible. The tradeoff is real, and we walk every client through it carefully before any documents are signed. For many families, the right answer is a combination: a revocable trust for flexibility and administration, with an irrevocable structure holding the assets most at risk.
Every plan we build starts with your family's goals, then draws on whichever services fit your situation. Learn more about Estate Planning, Probate Administration, Kids Protection Planning, Asset Protection, Elder Law, Special Needs Planning, and LIFT Planning.
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Serving Long Island and New York City
Jason R. Breit, Esq. P.C. provides fixed-fee estate planning for individuals and families throughout Long Island and New York City, including:
- Melville, NY
- Garden City, NY
- Huntington, NY
- Massapequa, NY
- Long Island, including Nassau and Suffolk Counties
- New York City
Prefer to meet remotely? Jason offers
estate planning consultations by Zoom, providing the same personalized guidance whether you’re on Long Island, in New York City, or meeting at his Melville office.
Common Questions About Asset Protection Trusts
Can I still benefit from assets I place in an asset protection trust?
It depends on the trust structure and your state's law. In New York, self-settled trusts — where you are both the grantor and a beneficiary — generally do not provide creditor protection. However, a spouse or children can often be named as beneficiaries, and certain irrevocable structures like Medicaid Asset Protection Trusts allow the grantor to retain limited rights, such as the right to income or to live in a home held by the trust.It depends on the trust structure and your state's law. In New York, self-settled trusts — where you are both the grantor and a beneficiary — generally do not provide creditor protection. However, a spouse or children can often be named as beneficiaries, and certain irrevocable structures like Medicaid Asset Protection Trusts allow the grantor to retain limited rights, such as the right to income or to live in a home held by the trust.How far in advance do I need to set up an asset protection trust?
Timing is critical. Transfers made to avoid known or anticipated creditors can be challenged as fraudulent conveyances under New York law. For Medicaid planning specifically, New York imposes a five-year look-back period, meaning assets transferred to a MAPT must be in the trust for at least five years before you apply for Medicaid benefits. The earlier you plan, the more options you have.Timing is critical. Transfers made to avoid known or anticipated creditors can be challenged as fraudulent conveyances under New York law. For Medicaid planning specifically, New York imposes a five-year look-back period, meaning assets transferred to a MAPT must be in the trust for at least five years before you apply for Medicaid benefits. The earlier you plan, the more options you have.Will an asset protection trust affect my estate taxes?
It can, and that is part of what we analyze during the planning process. Assets transferred irrevocably out of your estate may reduce your taxable estate, which can be a significant benefit for high-net-worth families. At the same time, the trust must be structured carefully to avoid unintended income tax consequences. Our LIFT planning process — which addresses lifestyle, insurance, financial, and tax considerations together — ensures these dimensions are evaluated as a whole.It can, and that is part of what we analyze during the planning process. Assets transferred irrevocably out of your estate may reduce your taxable estate, which can be a significant benefit for high-net-worth families. At the same time, the trust must be structured carefully to avoid unintended income tax consequences. Our LIFT planning process — which addresses lifestyle, insurance, financial, and tax considerations together — ensures these dimensions are evaluated as a whole.Is an asset protection trust the same as a Medicaid trust?
Not exactly. A Medicaid Asset Protection Trust is one specific type of asset protection trust, designed primarily to remove assets from the Medicaid countable estate. Asset protection trusts more broadly can serve a wider range of goals, including shielding assets from civil judgments, business liabilities, and divorce proceedings. The right structure depends on what risks you are planning against.Not exactly. A Medicaid Asset Protection Trust is one specific type of asset protection trust, designed primarily to remove assets from the Medicaid countable estate. Asset protection trusts more broadly can serve a wider range of goals, including shielding assets from civil judgments, business liabilities, and divorce proceedings. The right structure depends on what risks you are planning against.Can I set up an asset protection trust if I am already facing a lawsuit?
Generally, no — not for the purpose of shielding assets from that specific creditor. Transfers made after a claim arises, or in anticipation of one, can be unwound by a court as fraudulent transfers. Asset protection planning works best when it is done proactively, before any threat materializes. If you are currently in litigation, we can discuss what options remain available and what steps make sense going forward.Generally, no — not for the purpose of shielding assets from that specific creditor. Transfers made after a claim arises, or in anticipation of one, can be unwound by a court as fraudulent transfers. Asset protection planning works best when it is done proactively, before any threat materializes. If you are currently in litigation, we can discuss what options remain available and what steps make sense going forward.
Why Families Across Long Island Work With Our Firm
We bring asset protection trust planning into a complete picture of your family's financial and legal life. That means we are not placing assets into a trust in isolation — we are evaluating how that trust interacts with your estate plan, your insurance coverage, your business structure, and your tax situation. This integrated approach is the foundation of everything we do.
Our fees are fixed and agreed to in advance, so there are no surprises. We review every plan at least every three years to make sure it still reflects your life and the law. And because we build long-term relationships with the families we serve across Nassau County, Suffolk County, and communities like Garden City, Huntington, and Massapequa, we are here when your circumstances change — not just when the documents are signed.