A call came in last week from a client in Brooklyn. Her parents had set up a trust years ago, naming her uncle as trustee to manage the assets for her and her brother. For the first few years after they passed, things were fine. Then the annual statements stopped coming. When she asked her uncle about a distribution for her college tuition, his answers were vague and defensive. Her parents’ legacy, meant to provide for her future, now felt like a locked box with no key.
This is a story I have heard many times in my practice. A trust is not just a legal document—it is an instrument of stewardship. It’s a parent’s final act of provision, designed to protect and support the people they love most. When the person placed in charge of that sacred duty fails, the financial and emotional damage can be immense.
The Solemn Duty of a Trustee
When someone agrees to be a trustee, they are not simply agreeing to manage money. They are accepting a fiduciary duty—one of the highest standards of care recognized in law. This is not a casual responsibility. It is a legally enforceable obligation to act with complete loyalty and good faith in the sole interest of the beneficiaries.
A trustee’s responsibilities are clear. They must:
- Act with undivided loyalty: The trustee cannot engage in self-dealing. They cannot borrow from the trust, sell trust assets to themselves, or otherwise use the trust to their personal advantage. Their every action must be for the benefit of the beneficiaries.
- Manage assets prudently: The trustee must invest and manage trust assets as a prudent person would, considering the purposes, terms, and distribution requirements of the trust. This means avoiding overly speculative investments and diversifying the portfolio to manage risk.
- Account to the beneficiaries: A trustee has a duty to keep clear and accurate records and to keep beneficiaries reasonably informed about the trust and its administration. This includes providing regular accountings of all income, expenses, and distributions.
- Remain impartial: If there are multiple beneficiaries, the trustee cannot play favorites. They must treat all beneficiaries fairly according to the terms of the trust instrument.
When this duty is upheld, a trust operates as intended—as a seamless extension of the grantor’s wishes. When it is breached, the foundation of the entire plan begins to crumble.
Warning Signs of a Trust in Trouble
A breach of fiduciary duty rarely happens overnight. It often starts with small lapses that grow into significant problems. For beneficiaries, who may not be involved in the day-to-day management, spotting the red flags early is critical. These signs don’t automatically prove wrongdoing, but they absolutely warrant a closer look.
A lack of transparency. Is the trustee evasive? Do they refuse to provide copies of the trust document or regular financial statements? A responsible trustee understands their duty to be transparent. Secrecy is often the first sign that something is amiss.
Unexplained transactions or poor investment performance. A sudden drop in the trust’s value, or investments that seem wildly inappropriate for the trust’s stated goals, should be questioned. So should large, unexplained withdrawals or payments to the trustee beyond reasonable compensation.
Comingling of assets. This is a major red flag. If a trustee mixes trust funds with their own personal funds—for example, by depositing trust income into their personal bank account—they have committed a serious breach of duty. Trust assets must always be kept separate.
Apparent conflicts of interest. Has the trustee hired their own company to perform services for the trust? Have they sold a trust-owned property to a friend for below market value? These actions compromise the duty of loyalty and are immediate cause for concern.
A Beneficiary’s Rights Under New York Law
If you are the beneficiary of a New York trust and you suspect mismanagement, you are not powerless. The law provides specific tools to hold a trustee accountable. The first step is typically a formal, written demand for an accounting. This is not a mere request—it is the exercise of a legal right.
If the trustee ignores the request or the accounting reveals serious problems, the next step is to petition the Surrogate’s Court. The court has the authority to intervene, compel action, and—if necessary—remove the trustee from their position.
The grounds for removal are laid out in state law. Under Surrogate’s Court Procedure Act §711, a beneficiary can petition the court to remove a trustee who is wasting assets, has been dishonest, is unfit for the execution of the office, or is guilty of other misconduct. This is a powerful remedy, but it requires a well-prepared case demonstrating why the trustee’s continued service puts the trust and its beneficiaries at risk.
The goal is not always punitive. Sometimes, the goal is simply to get the trust back on track, either by compelling the current trustee to fulfill their duties or by replacing them with a corporate trustee or another individual who can act as a responsible steward. The court’s primary concern is protecting the assets and honoring the original intent of the person who created the trust.
If you are a beneficiary and the warning signs I’ve described are familiar, your first move is not necessarily a lawsuit. It is to formally request a written accounting of the trust’s assets, income, and expenditures. This is your right. Our firm can assist in drafting this formal request and, if necessary, prepare the petition to compel an accounting in court.
