I recently met with two siblings, beneficiaries of their late father’s trust. The assets were significant—a family business in Brooklyn, a portfolio of securities, and the Manhattan apartment where they grew up. The problem? They were co-trustees, and every decision, from paying a utility bill to evaluating a buyout offer for the business, had become a battleground. Their father’s intention was to unite them through shared stewardship. Instead, the trust was tearing their relationship apart.
This is a situation we see far too often. Naming a child, sibling, or close friend as your trustee or executor can feel like the most natural, trusting choice. And sometimes, it is. But the role of a fiduciary—the legal term for someone entrusted to manage assets for another—is demanding. It requires impartiality, financial acumen, and a thick skin. It is not an honor; it is a job with serious legal obligations and personal liability.
The Fiduciary Duty of Impartiality
A trustee’s primary responsibility is to the terms of the trust and the well-being of its beneficiaries. When the trustee is also a beneficiary, or has a complicated history with other beneficiaries, this can become almost impossible. A son may feel his sister is being fiscally irresponsible. A daughter might resent her brother for a decades-old family argument. These personal dynamics have no place in trust administration, but when family is involved, they are rarely left at the door.
A professional fiduciary, whether an attorney, a bank’s trust department, or a private trust company, has one key advantage: objectivity. They have no personal stake in the outcome beyond their legal and ethical duties. Their job is to interpret the trust document as written, communicate clearly with all beneficiaries, and act impartially—not just for the person who yells the loudest. This neutrality can preserve not only the assets in the trust, but the family relationships it was designed to support.
When a Professional is the Prudent Choice
I advise clients to consider appointing a professional fiduciary in several common scenarios. This isn’t about a lack of trust in one’s family; it’s about a clear-eyed assessment of the task at hand and setting up a plan for success.
Consider a professional if your plan involves:
- Complex or Unique Assets: Managing a closely-held business, a commercial real estate portfolio, or a collection of valuable art requires specialized expertise. A professional fiduciary either has this knowledge in-house or knows exactly who to hire to manage these assets properly.
- Potential for Conflict: In blended families, or where certain children have been more successful than others, the potential for disagreement is high. An independent third party can act as a buffer, making decisions based on the trust’s directives rather than on emotion or perceived favoritism.
- Burdensome Administration: A trust for a beneficiary with special needs or a trust designed to last for multiple generations requires consistent, long-term administration. This can be an enormous burden to place on a family member who has their own career, family, and life to manage.
- A Lack of Willing Candidates: Sometimes, the simple truth is that no one in the family is willing or able to take on the role. A child may live overseas, or a sibling may not have the financial sophistication. Appointing them anyway is a recipe for mismanagement and legal trouble.
The Standard of Care Under New York Law
Being a trustee is not a matter of just using your best judgment. New York law holds fiduciaries to a very high standard. The Prudent Investor Act, codified in EPTL § 11-2.3, requires a trustee to “exercise reasonable care, skill and caution” in managing a trust’s assets. This is a legally defined standard. It means a trustee has an affirmative duty to diversify investments, monitor performance, and make decisions based on a deliberate and documented process.
A well-meaning family member who simply leaves assets in a low-interest savings account or fails to properly account for distributions could be found in breach of this fiduciary duty. The consequences can be severe, including being held personally liable for any financial losses incurred by the trust. A professional fiduciary understands these duties and has the systems in place to comply, from sophisticated investment reporting to meticulous record-keeping for Surrogate’s Court.
At our firm, we act as professional fiduciaries for a select number of clients, and we also advise individual family members who find themselves serving as trustees. The work is demanding, but it is essential to the stewardship of a family’s generational legacy. Choosing the right custodian for that legacy is one of the most important decisions you will make.
If you are creating your estate plan or find yourself named as a trustee, the first step is to get a clear, unbiased assessment of the duties involved. We invite you to schedule a consultation to review the specific assets and family dynamics of your situation, so you can make a truly informed decision.
