A client came into my Manhattan office last week, a founder who had built her company from the ground up. She was ready to create a revocable living trust—a foundational tool for avoiding the delays and costs of Surrogate’s Court. “I’ll be the trustee, of course,” she said. It wasn’t a question. For someone used to having complete control over her business and finances, managing her own trust seemed like the only logical choice.
For many people, she’s right. In New York, when you create a revocable trust, you—the grantor—can serve as the initial trustee. This is not only permitted—it’s the most common arrangement. This structure allows you to retain full control over your assets during your lifetime. You can buy, sell, and manage the property within the trust just as you did before. For tax purposes, nothing changes; you report the trust’s income on your personal return. The arrangement offers simplicity and autonomy.
But control during your lifetime is only half the story. A trust is not just a tool for the present. It is a plan for future contingencies. The real test of its strength comes when you are no longer able to manage your own affairs.
The Limits of Control: Planning for Incapacity
We establish trusts to create a seamless transition of authority—first in case of incapacity, and then upon death. Serving as your own trustee works perfectly until the day it doesn’t. A sudden illness or accident can leave you unable to manage your finances, and if you are the sole trustee, your trust is effectively frozen. Your family would then face the very situation you tried to avoid: a court proceeding to appoint a conservator to manage your affairs.
The most critical part of this arrangement is not naming yourself as the initial trustee, but deliberately choosing your successor trustee. This is the person or institution that will step in when you no longer can. This decision is an act of profound stewardship. Your successor trustee will have a fiduciary duty—the highest standard of care under the law—to manage the trust assets prudently for your benefit and, eventually, for your beneficiaries.
This transition requires deliberate planning. We don’t just name a person; we build a clear framework for when and how they take control. This often involves specific triggers outlined in the trust document, such as a determination of incapacity by one or more physicians, to prevent ambiguity and family disputes.
When a Separate Trustee Is Not a Choice
While a revocable trust offers flexibility, other types of trusts demand a separation of roles from the outset. This is especially true for irrevocable trusts designed for asset protection or specific tax planning goals.
For example, if the goal is to move assets out of your taxable estate or shield them from future creditors, you generally cannot be the trustee with discretionary powers over distributions. Retaining that level of control could cause tax authorities or courts to disregard the trust entirely, defeating its purpose.
There’s a legal principle at play here known as the “doctrine of merger.” A trust requires a separation between the legal owner (the trustee) and the beneficial owner (the beneficiary). Under New York law, if the sole trustee and the sole beneficiary are the same person, the trust can fail because the legal and beneficial titles merge into one. While a grantor can be the trustee and one of the beneficiaries, careful drafting is required to avoid this outcome, often by naming additional beneficiaries. This principle is reinforced throughout New York’s Estates, Powers and Trusts Law (EPTL), which governs the creation and administration of trusts.
In these more complex situations, appointing an independent trustee—a trusted individual or a corporate trustee like a bank’s trust department—is not just a prudent choice but a legal necessity. It ensures the integrity of the trust structure and the achievement of your long-term goals for your legacy.
Beyond the Question of “Can I?”
The ability to serve as your own trustee provides welcome control and simplicity. For a standard revocable living trust, it is often the best approach—at first. But the planning cannot stop there. The more important question is not “Who is the trustee today?” but “Who will be the custodian of my legacy tomorrow?”
Answering that question requires a deliberate process. A good first step is to create a candidate list for your successor trustee and document the specific qualities you believe are necessary for that role. When you are ready, we can review that list and begin structuring the legal framework that empowers them to act when the time comes.
