I often meet with clients who have been named as a trustee in a family member’s estate plan. They see it as an honor, a final vote of confidence from a loved one. But the reality soon sets in. They are now the legal custodian of assets intended for others—often nieces, nephews, or their own siblings—and every decision they make can be scrutinized.
Accepting this role is not a ceremonial gesture. It is an agreement to take on one of the most demanding fiduciary roles in our legal system. You are stepping into a position of stewardship, bound by a strict set of duties to protect and manage assets for the exclusive benefit of others. Understanding those duties is not just good practice; it is the only way to avoid personal liability and family conflict.
The Core of Fiduciary Duty
A trustee’s role is governed by a single concept: fiduciary duty. This is the highest standard of care imposed by law, comprising several key obligations—the most critical being the duties of loyalty and prudence.
The duty of loyalty is absolute. It means the trustee must act solely in the interest of the beneficiaries. There can be no self-dealing, no co-mingling of personal and trust assets, and no action that benefits the trustee at the expense of the trust. If a family home in Brooklyn needs to be sold, the trustee cannot sell it to themselves or a relative at a discount, even with the best intentions. The transaction must be at arm’s length and for the clear benefit of the trust.
The duty of prudence governs how a trustee manages and invests trust assets. This does not mean a trustee must be a Wall Street expert, but it does mean they must act with care and skill. New York’s Prudent Investor Act, codified in Estates, Powers and Trusts Law (EPTL) § 11-2.3, provides the framework. It does not demand that a trustee predict the market or generate the highest possible returns. It demands a prudent process. This involves creating a sound investment strategy that considers the trust’s purpose, timeline, risk tolerance, and the specific needs of the beneficiaries.
A trustee for a 25-year-old beneficiary has a very different investment horizon than one for an 85-year-old. The law recognizes this. What it will not forgive is negligence—failing to diversify assets, holding onto unproductive property for sentimental reasons, or simply letting cash sit idle for years, eroded by inflation.
Beyond the Balance Sheet: The Duty to Communicate
A trustee’s work extends beyond spreadsheets and investment statements. A core duty is communication—keeping beneficiaries reasonably informed about the trust and its management.
This does not mean a trustee must seek permission for every transaction. But it does mean providing regular, clear accountings of what the trust holds, what it has earned, and what has been spent. In my practice, I find that a failure to communicate is the single greatest source of friction between trustees and beneficiaries. Silence breeds suspicion. A beneficiary left in the dark may assume the worst, leading to costly and emotionally draining disputes that often end up in Surrogate’s Court.
A trustee must also be impartial. When a trust has multiple beneficiaries—say, three siblings with different financial needs—the trustee cannot favor one over the others. If the trust allows for discretionary distributions for “health, education, and support,” the trustee must apply a consistent, defensible standard when evaluating requests. This requires careful judgment and, just as importantly, meticulous record-keeping to document the rationale behind each decision.
Common Pitfalls and Personal Liability
Even the most well-intentioned trustee can make mistakes. The most dangerous are those that blur the line between the trustee’s personal finances and the trust’s assets. “Borrowing” from the trust, even with a plan to pay it back quickly, is a prohibited act of self-dealing. Hiring your own company to perform services for the trust, unless explicitly authorized by the trust document or the court, is a conflict of interest.
These are not minor missteps. A breach of fiduciary duty can have severe consequences. A beneficiary can petition the court to have the trustee removed. More pointedly, a trustee can be held personally liable to repay any losses the trust suffered due to their mismanagement or breach. If a trustee’s poor investment choices—or failure to invest at all—causes a $100,000 loss, the court can order them to make the trust whole from their own pocket.
Stewardship. That is the word I come back to. Serving as a trustee is a profound responsibility to carry out someone’s legacy. It requires diligence, transparency, and an unwavering focus on the beneficiaries. It is a role that should never be accepted lightly.
If you have been named a trustee and are unsure of your duties, the first step is not to act, but to understand. We offer a Trustee’s Intake Session, a one-hour meeting to review the trust document with you and outline a clear roadmap for your specific responsibilities under New York law.
