You can legally protect your assets from creditors in New York by using a combination of tools — irrevocable trusts, LLCs and business entities, ERISA-qualified retirement accounts, adequate liability and life insurance, and the statutory exemptions the law already gives you under CPLR Article 52 — but only if you act before a claim against you arises. New York does not let you hide assets after you already owe someone money, and it does not allow you to shield your own assets from your own creditors inside a revocable or self-settled trust. The good news is that, with proper planning and the right legal structures, a great deal of legitimate protection is available. This guide walks a newcomer through how it actually works in the Empire State.
First, the Hard Truth: What New York Does Not Allow
Many people read about “asset protection trusts” online and assume they can pour their own money into a trust, keep control of it, and become untouchable. That does not work in New York.
New York does not authorize self-settled domestic asset-protection trusts (DAPTs). In plain terms: you cannot be both the person who funds a trust and the person it protects from your own creditors. A revocable living trust — the kind you can change or cancel anytime — offers zero creditor protection, because the law treats those assets as still belonging to you.
Just as important, timing is everything. Under New York’s Debtor & Creditor Law, transfers made to defeat an existing or reasonably foreseeable creditor can be unwound as voidable (fraudulent) conveyances. If you transfer assets the week before a lawsuit lands, a court can claw them right back. Real asset protection is a fence you build in good weather — long before the storm.
The Legitimate Asset-Protection Toolbox in New York
Here are the tools New York actually recognizes, and what each one does.
| Tool | What It Protects | Key Limitation |
|---|---|---|
| Irrevocable trust | Assets you permanently give up control over | You cannot keep control or revoke it |
| Medicaid Asset Protection Trust (MAPT) | Home and savings from nursing-home costs | Irrevocable; 5-year look-back |
| LLC / business entity | Separates business liability from personal assets | Must respect corporate formalities |
| ERISA-qualified retirement plans | 401(k)s and pensions | IRAs have narrower protection |
| Liability & umbrella insurance | First line of defense against claims | Coverage limits apply |
| Life insurance | Proceeds for beneficiaries | Must be properly structured |
| CPLR Article 52 exemptions | Homestead, wages, certain property | Statutory dollar caps |
1. Irrevocable Trusts
An irrevocable trust is the cornerstone of serious asset protection in New York. Once you transfer assets into it and give up control, those assets generally are no longer “yours” for creditor purposes. The trade-off is real: you cannot simply change your mind and take the money back. New York’s trust framework lives in EPTL Article 7. Learn more on our trusts page.
A common variation is the Medicaid Asset Protection Trust (MAPT) — an irrevocable trust designed to protect your home and savings from being consumed by long-term care costs. Because of Medicaid’s five-year look-back period, a MAPT must be funded well in advance of needing care.
2. LLCs and Business Entities
If you own rental property or run a business, holding it inside a limited liability company (LLC) separates that liability from your personal assets. If a tenant sues over an injury at a rental, a properly maintained LLC keeps the claim contained to the business — not your home and personal savings.
3. Retirement Accounts and Insurance
ERISA-qualified retirement plans such as 401(k)s enjoy strong protection from creditors. Adequate liability insurance — including a personal umbrella policy — is often the cheapest and most overlooked layer of protection, absorbing claims before they ever reach your assets. Life insurance, properly structured, can also pass value to your family outside the reach of many creditors.
4. Statutory Exemptions Under CPLR Article 52
New York law already exempts certain property from creditors automatically. The most important is the homestead exemption under CPLR §5206, which shields a portion of the equity in your primary residence. Other exemptions cover a percentage of wages and specific categories of personal property.
Where Asset Protection Meets Estate Planning
Asset protection is one piece of a complete plan. A full New York estate plan includes:
- A will under EPTL §3-2.1 to direct who receives your property — see our wills page.
- One or more trusts under EPTL Article 7 for control, privacy, and protection.
- A durable power of attorney under GOL §5-1513 so someone you trust can manage your finances if you cannot — see our power of attorney page.
- A health care proxy under Public Health Law Article 29-C for medical decisions.
Explore how these fit together on our estate planning overview.
Don’t Forget the New York Estate Tax
Protecting assets during life and preserving them at death go hand in hand. For 2026, New York’s basic exclusion amount is $7,350,000. But New York has a notorious “cliff”: if your estate exceeds 105% of the exclusion — $7,717,500 — you lose the entire exemption, not just the excess. Estate tax rates are progressive, from 3% up to 16%. New York has no gift tax, but gifts made within three years of death are added back into your taxable estate. Read more in our NY estate tax guide and at tax.ny.gov.
A Simple Order of Operations
- Insure first. Maximize liability and umbrella coverage — it’s fast and inexpensive.
- Separate liabilities. Place businesses and rentals into properly maintained LLCs.
- Plan irrevocably, in advance. Use irrevocable trusts (including a MAPT) while you are healthy and claim-free.
- Use your exemptions. Make sure your homestead and retirement protections are documented.
- Coordinate with your estate plan and tax exposure. Keep one eye on the $7.35M exclusion and the cliff.
Frequently Asked Questions
Can I put my house in a trust to protect it from creditors?
Only an irrevocable trust offers meaningful protection, and only if funded before a claim arises. A revocable trust gives no creditor protection because you still control the assets.
Does New York allow domestic asset-protection trusts (DAPTs)?
No. New York does not authorize self-settled DAPTs. You cannot shield your own assets from your own creditors in a self-settled or revocable trust.
What happens if I transfer assets after a lawsuit is filed?
Those transfers can be unwound as fraudulent conveyances under New York’s Debtor & Creditor Law. Protection must be in place before a claim is foreseeable.
Is my retirement account safe from creditors?
ERISA-qualified plans such as 401(k)s receive strong protection. IRAs have more limited protection, so coordinate with counsel.
Protect What You’ve Built — Start the Right Way
Asset protection in New York rewards those who plan early and follow the law. Done correctly, irrevocable trusts, business entities, insurance, and statutory exemptions can preserve your legacy for the people you love. Done too late, or with the wrong structure, it can be undone in court.
Speak with Russel Morgan, Esq. and the team at Morgan Legal Group. Schedule a confidential consultation today: Book your 30-minute call.
Further reading from Morgan Legal Group: the Morgan Legal Group practice areas.