A client recently sat in my Manhattan office with a difficult question. He wanted to name his sister as the trustee for his children’s inheritance. He loves her, and he trusts her implicitly with personal matters. But she has a history of making impulsive financial decisions and has significant personal debt. “Can I still name her?” he asked. “I don’t want to hurt her feelings.”
My answer had little to do with feelings and everything to do with stewardship. The trust we place in a friend to keep a confidence is not the same trust the law requires of a fiduciary—the person legally responsible for managing your legacy. The two are worlds apart.
Personal Affection vs. Fiduciary Duty
In estate planning, the person you appoint as your executor, trustee, or agent under a power of attorney is held to a strict legal standard: fiduciary duty. It is the highest standard of care in our legal system, demanding absolute loyalty and good faith. A fiduciary cannot act in their own self-interest. They must act solely for the benefit of the estate or the trust’s beneficiaries.
This is where personal affection can cloud judgment. We often choose the people we are closest to—a spouse, a sibling, an adult child. While this can be a sound choice, it is only the right choice if that person has the specific skills and temperament for the job. The role requires discipline, organization, impartiality, and the ability to say “no,” even to a grieving family member making an emotional—but financially imprudent—request.
The question is not “Do I love this person?” The question is “Can this person manage complex financial assets, file tax returns, communicate clearly with all beneficiaries, and withstand pressure from family members while making difficult decisions?”
The Prudent Investor Standard in New York
The law does not leave this to chance. A fiduciary’s responsibility is codified. In New York, a trustee’s management of trust assets is governed by the Prudent Investor Act, found in Estates, Powers and Trusts Law (EPTL) § 11-2.3. This statute requires a trustee to “exercise reasonable care, skill and caution to make and implement investment and management decisions as a prudent investor would.”
This is not an abstract guideline—it is an enforceable command. The law directs the trustee to consider the purposes of the trust, economic conditions, the potential for inflation, tax consequences, and the specific needs of the beneficiaries. A well-meaning but financially unsophisticated family member may unintentionally violate this standard, exposing themselves to personal liability and jeopardizing the very assets you intended to protect. A person who struggles to manage their own finances is rarely equipped to prudently manage someone else’s.
Warning Signs in a Potential Fiduciary
When I counsel families on this decision, we do not focus on character flaws. We focus on observable behaviors and life skills relevant to the role. A person may be a wonderful, loving human being but still be a poor choice for a fiduciary. We look for practical warning signs:
- Financial Instability. Does the person have a history of credit problems, bankruptcy, or chronic debt? Someone under financial pressure may be more tempted to “borrow” from the estate—an act of self-dealing that is a catastrophic breach of fiduciary duty.
- Aversion to Conflict. A trustee must often make unpopular decisions. If your chosen candidate is a people-pleaser who cannot enforce the rules of the trust or treat all beneficiaries equally, they may create more family conflict than they resolve.
- Disorganization. The role of a fiduciary is paperwork-intensive. It involves meticulous record-keeping, meeting tax deadlines, and communicating with multiple parties. Chronic disorganization is a significant liability.
- Poor Communication. A primary cause of litigation we see in Surrogate’s Court is a fiduciary who fails to communicate with beneficiaries. If your candidate is secretive or simply bad at returning calls and emails, it can breed suspicion and lead to expensive legal challenges.
Choosing the right person is a deliberate act of legacy protection. It is one of the most important decisions in your entire estate plan. An error in judgment here can unravel a lifetime of careful planning.
Before you finalize your will or trust, take a deliberate look at the people you have chosen to carry out your wishes. If you have reservations, they must be addressed. We can schedule a confidential review of your prospective fiduciaries to discuss the practicalities of their roles and the contingencies to put in place if your first choice cannot serve.
