A client recently came to my Manhattan office with a thick binder containing a trust her parents created in 1995. It was a prudent move at the time. Decades later, the family’s reality is completely different. One child is estranged, another has special needs, and the trustee—her brother—is overwhelmed by duties he never understood. The document, meant as a gift, has become a source of profound frustration. My firm sees this situation often. Trusts are a cornerstone of estate planning, but they are not a universal remedy. Sometimes, they are the wrong tool for the job.
The Irrevocable Straitjacket
The appeal of many trusts is their permanence, especially irrevocable trusts designed to move assets out of an estate for tax or asset protection. Once created, an irrevocable trust is just that—irrevocable. You cannot change its terms, alter its beneficiaries, or reclaim the assets placed within it. This rigidity becomes a significant liability over time.
Life is not static. A beneficiary may develop an addiction, a responsible child may become less so, or a change in tax law may make the trust’s original purpose obsolete. New York law provides some mechanisms for altering a trust, but they are difficult and costly. For instance, EPTL § 7-1.9 allows for modification, but typically only with the consent of all interested parties. When beneficiaries are minors, unborn, or uncooperative, securing that consent can be impossible. The family is left bound by decades-old decisions that no longer serve them.
The Trustee’s Burden is a Fiduciary Duty
Serving as a trustee is not an honorary title. It is a demanding job with significant legal exposure. Many people name a family member or friend as trustee without fully appreciating the weight of the responsibility. A trustee has a fiduciary duty—the highest standard of care in law—to manage assets prudently, make distributions correctly, keep meticulous records, and file the trust’s tax returns.
This is not a passive role. The trustee must manage investments, apply complex distribution standards—such as for “health, education, maintenance, and support”—and communicate with beneficiaries who may not agree with their decisions. If a trustee makes a poor investment or is perceived to favor one beneficiary, they can be held personally liable for any losses. This risk forces non-professional trustees to hire attorneys, accountants, and financial advisors, incurring costs that erode the trust’s principal.
A Blueprint for Family Conflict
A will is administered and closed. A trust can operate for generations, creating a long-term financial relationship between family members who might not otherwise choose to be entangled. This structure can sow discord.
When one sibling is named trustee for another, the power imbalance strains even the strongest bonds. The beneficiary must ask for money; the trustee has the power to say no. Every decision—from selling a property to choosing an investment—is open to second-guessing. I have seen trusts turn into a battleground where family grievances are fought through the language of fiduciary duty and distribution requests. Instead of preserving a legacy, the trust becomes the instrument that dismantles it, leading to expensive litigation in Surrogate’s Court.
Stewardship. That is the goal. A poorly considered trust achieves the opposite. Before committing assets to a rigid structure, you must weigh the potential for conflict and administrative burdens against the intended benefits. An honest assessment is the first step toward a plan that truly serves your family.
If you are a trustee or the creator of a trust that no longer fits your family’s circumstances, a prudent next step is to schedule a fiduciary review of the document. We can analyze its terms, identify areas of risk or inflexibility, and discuss the options New York law provides.
