New York City’s pied-à-terre tax was designed to extract money from second-home owners wealthy enough not to live in the city full-time. A side effect no one planned for: It’s pushing middle-class and working homeowners, people who already live in their houses, into estate-planning conversations they’ve never had before, at hourly rates they’ve never had to pay, for advice the wealthy have had access to for generations.
The rush of publicityaccompanying the mayor’s office highlighting a list of over 680,000 New York properties that could theoretically be subject to a new tax has inadvertently advertised how public most property data is. And it’s advertised the benefits of seeking some totally legal privacy, or risk inadvertent doxxing.
“The wealthy and the ultrahigh-net-worth have been in this game for a long time,” said Myles Fischer, a partner who co-leads the trusts and estates practice group at Harris Beach Murtha. “The rest are sort of catching up.” And that isn’t cheap. Many middle-class and blue-collar homeowners are “being forced into a situation where they have to sit down with lawyers” to get planning advice that families with means secured years ago. After all, he added, “it’s not that you have to be a rich person to have something worth protecting. We see it from across the board.”
The trigger, in this case, was a public records disclosure. When the Department of Finance released its supplemental pied-à-terre assessment file, the coverage focused on penthouses and the LLCs holding them. But the unfiltered file swept in far more than luxury properties—it included modest homes in Bayside, single-family houses in Staten Island, properties whose owners may have had no idea their name, address, and assessed value were sitting in a publicly searchable dataset. Many still don’t.
Fischer wasn’t surprised by the reaction. “Anonymity is desirable when it can be achieved,” he said. “But anonymity is also typically only one piece of the pie, so to speak. It’s part of the tax plan, part of the estate plan, part of the asset protection, limitation-on-liability sort of pie,” he told Fortune. Privacy, in other words, is the door. The estate planning is what’s behind it.
The trip-and-fall scenario
For Fischer, the most fundamental reason to move real estate into an LLC or trust has nothing to do with taxes or public records. It’s liability—the kind that applies to a million-dollar house in Staten Island as directly as it does to a Central Park South penthouse. (The median price to buy a cooperative in Manhattan is $850,000 and to buy a condo it’s $1.75 million, netting out to $1.225 million combined.)
The scenario he describes is simple: Someone slips and falls on your property. If the property sits inside an LLC or trust rather than in the owner’s name, the injured party can sue the entity, but the owner’s personal assets—savings, other real estate, retirement accounts—stay out of reach. “The only thing that’s subject to that lawsuit would be the assets inside that LLC or trust,” Fischer said. “All my personal assets would be protected.” There are ways to pierce that structure if the entity is mismanaged, he noted, treating it “like a piggy bank,” commingling funds, failing to maintain proper records, but a properly maintained LLC keeps personal exposure bounded.
Fischer pushed back, gently, on the idea that this kind of planning is exclusively a rich person’s game. Discussing homeowners who could get caught up in the pied-à-terre property list, he said there is a case to be made for even mom-and-pop homeowners. “You have these poor people in Staten Island whose names are on the list, and in their mind they’re poor. They have a million-dollar house, but that’s probably five times their other assets. It’s quite perverse.” Mom-and-pop owners, he said, use the same structures as the ultrawealthy for four core reasons: to limit liability, organize assets, avoid probate, and mitigate taxes.
The look-through caveat
Before anyone rushes to restructure, there’s an important limitation that Denisse Moderski, a state and local tax partner at PKF O’Connor Davies, flags immediately: Moving a property into an LLC or trust does not, by itself, get an owner off the hook for the pied-à-terre surcharge.
“Even with a trust, the city has come out that they are applying a look-through,” she told Fortune. “So even if you start moving properties into a trust, you still have to wonder what records the city is going to have to look through—because there’s a potential risk here that even if you transfer this property into an LLC or an entity, this look-through rule would apply, and it could still subject a taxpayer to the surcharge.”
The look-through rule means the city treats the beneficial owner of an entity as the taxpayer for surcharge purposes, so a name change on the deed doesn’t change who owes the bill. Restructuring may address privacy and liability. It does not address the surcharge itself. “They have assessed this value on properties at much lower value, but the rate is much higher,” Moderski added. “When you’re thinking about assessment, you have to look at it from both angles.”
That said, she has seen an uptick in outreach from owners who aren’t the typical trust-and-estates client. “I can tell, especially with higher-profile posts, they may want to because they don’t want this public information to be out there.” Privacy remains a real motivation, the look-through rule affects the tax bill, not the public-records exposure. A property in an LLC titled “Five Park Place Trust” is a different public-records entry than one in an individual’s name.
How the wealthy actually title their holdings
Fischer was careful not to discuss any specific names that surfaced in recent property-list coverage, but he did note a pattern in how the ultrawealthy structure their holdings: People seeking anonymity typically title their trusts with unrelated names—“the XYZ Trust” or “the 40 Fulton Trust”—rather than their own, and it’s their revocable living trust, the backbone of their broader estate plan, that ends up holding the property. He suggested that the pied-à-terre episode makes a case for a specific fix: a stand-alone entity used only to hold real estate for purposes of the public assessor’s record, separate from an individual’s larger estate-planning structure, so that privacy on property records doesn’t require restructuring an entire estate plan.
He suggested the pied-à-terre episode makes a case for a specific structural fix that even middle-income owners might consider: a stand-alone entity used only to hold real estate for purposes of the public assessor’s record, kept separate from the individual’s larger estate-planning structure. That way privacy on property records doesn’t require restructuring an entire estate plan every time the law changes.
What happens when there’s no plan
The highest-stakes version of the catch-up conversation isn’t about the pied-à-terre tax at all. It’s about what happens to the house after the owner dies.
Fischer described a case that stayed with him: a client who died without a will, in his early thirties, leaving a spouse and young children. Under New York intestate law—which applies when there is no will; probate, Fischer noted, is actually the process that follows once a will exists—the estate was split by statute between the widow and a trust for the children. The couple’s apartment was deeded half to the widow and half in trust for a minor. “Not what the poor 30-year-old husband would have wanted,” Fischer said, but there was no document expressing what he did want, so the statute filled in the answer.
A trust changes that. It lets an owner control not just who inherits but when and how—keeping an inheritance out of the hands of an 18-year-old, keeping assets out of a contested probate proceeding, and preserving what Fischer called the “protected” quality of wealth for the next generation the way it was protected for the person who built it.
None of that is new. The planning has been available to anyone willing to pay for it. What changed last month is that a spreadsheet briefly made a few hundred thousand New York homeowners aware their name was in a public record they’d never thought about—and some of them started asking questions that their wealthier neighbors answered years ago.
“Even with a trust, the city has come out that they are applying a look-through. So even if you start moving properties into a trust,” Moderski told Fortune. “You still have to wonder what records the city is going to have to look through—because there’s a potential risk here that even if you transfer this property into an LLC or an entity, this look-through rule would apply, and it could still subject a taxpayer to the surcharge.”
