A few years ago, a new client came to our office with a thick binder. It contained a revocable living trust prepared by another firm for his parents in Brooklyn. His father had recently passed, and his mother, now in her 80s, had named him successor trustee. He assumed his role would be simple—pay a few bills, manage the accounts, and that’s it. He was wrong.
He was now a fiduciary, legally responsible for managing, investing, and distributing assets for his mother’s benefit. The trust held real estate, a brokerage account, and several CDs. He quickly discovered that every transaction required careful documentation, that he was expected to produce regular accountings, and that he was personally liable if he made a poor investment decision. The trust that was supposed to make life easier had become his second job.
Trusts are an essential part of our work in estate planning. They offer powerful advantages for avoiding probate, managing assets for beneficiaries, and protecting a legacy. But they are not a simple instrument for every situation. The conversation about creating a trust must also include a frank discussion of its potential downsides.
The Administrative Reality of Being a Trustee
The most overlooked downside of a trust is the ongoing work it requires. A trust is not a document you sign and file away. It is a living legal entity that requires active management, and the person you name as trustee is stepping into a demanding role with significant legal obligations. This isn’t just a matter of paying bills—it’s a formal position of stewardship.
In New York, a trustee’s conduct is governed by a strict set of rules, including the Prudent Investor Act, found in EPTL §11-2.3. This statute requires a trustee to exercise reasonable care, skill, and caution when managing trust assets. This is not a suggestion; it is a legal standard. A trustee cannot simply park all the assets in a low-interest savings account, nor can they speculate on risky ventures. They have a fiduciary duty to act in the best interests of the beneficiaries, which involves balancing risk and return, diversifying investments, and keeping meticulous records.
For a family member—a son, a daughter, a niece—this can be an enormous burden. They may lack the financial background, the time, or the emotional fortitude to manage family assets, especially when other beneficiaries may question their decisions. The role can strain family relationships and expose a well-meaning but inexperienced person to legal liability.
The Upfront Cost and Effort of Funding
While a trust can save a family time and money by avoiding the Surrogate’s Court probate process, creating and funding it requires a greater initial investment than a simple will. Drafting a trust that accurately reflects your intentions and accounts for various contingencies is complex legal work. But the legal fees are only part of the equation.
A trust is an empty vessel until you fund it. This means you must formally transfer ownership of your assets into the name of the trust. Your house deed needs to be changed. Your non-retirement brokerage accounts must be re-titled. Bank accounts need to be updated. This process—funding the trust—is the most critical step, and it is the one most often neglected.
We have seen cases where a family creates a trust but fails to fund it properly. When they pass away, their assets are still in their individual names. The result? The trust is useless for those assets, and the estate must go through the very probate process the trust was designed to avoid. The upfront effort is significant, and it’s a commitment that has to be seen through for the trust to function as intended.
Loss of Control and Flexibility
Finally, we need to talk about control. With a revocable living trust, you as the grantor can change it, amend it, or even revoke it entirely during your lifetime. You remain in control. However, many people mistakenly believe this type of trust provides asset protection from creditors or long-term care costs. It does not. Because you retain control, the assets are still considered yours for those purposes.
To achieve asset protection, you typically need an irrevocable trust. And the name says it all. When you transfer assets to an irrevocable trust, you are giving up control over them. You cannot simply take them back. While these trusts are structured with specific provisions for distributions, the decision to give up direct access to your own property is a profound one.
This trade-off is often worthwhile, particularly in high-net-worth estates or for Medicaid planning. But it must be a deliberate and fully informed choice. You are placing your faith—and your assets—in the hands of a trustee, bound by the rigid terms of a document that is very difficult to change.
A trust can be the cornerstone of a multigenerational legacy. But its power comes with responsibilities. Before settling on a trust as the foundation of your plan, I advise clients to schedule a dedicated meeting to discuss the practical, day-to-day realities your future trustee will face.
