When a Brooklyn father passes away and leaves his multi-family property in a trust, the eldest sibling named as trustee often expects a brief, straightforward handover. They assume the title is an honorific—a final nod to their birth order or a reward for being the responsible child. Then the property taxes come due, the younger siblings demand an immediate cash distribution, the roof starts leaking, and the realization finally sets in: being a trustee is not a badge of honor. It is a job.
I spend hours counseling the individuals creating trusts and those appointed to manage them. The disconnect between what people think a trustee does and what the law actually requires is vast. A trust is only as effective as the person managing it. If you are appointed to this role, or if you are deciding who should manage your legacy, you must understand the absolute legal realities of trust administration.
The Fiduciary Standard is Absolute
The moment you accept the role of a trustee, you step into a legal classification known as a fiduciary. This is the highest standard of care recognized in the American legal system. It means you are no longer acting as a sibling, a friend, or a surviving spouse—you are acting as the legal custodian of someone else’s property.
Your primary duty is absolute loyalty to the beneficiaries. You must put their interests entirely above your own. If there is a conflict of interest, the trustee must step back. For example, if the trust owns real estate, the trustee cannot sell that property to themselves at a discount, even if they believe they are doing the trust a favor by saving on real estate commissions. Every action taken must be deliberate, documented, and entirely for the benefit of the people named in the trust document.
When families fail to grasp this concept, the results are predictably disastrous. A trustee who treats the trust checking account as an extension of their own wallet, even if they intend to pay the money back, commits a breach of fiduciary duty. In the eyes of the law, intent matters far less than conduct.
The Core Duties of a Trustee
A trust does not run on autopilot. The person at the helm is responsible for a continuous series of administrative, financial, and legal tasks. While the specific duties depend on the language of the trust instrument, the fundamental obligations remain consistent.
First, the trustee must marshal and protect the assets. This means locating bank accounts, transferring deeds, securing vacant real estate, and ensuring adequate insurance policies are in place. If an asset is losing value due to neglect, the liability falls squarely on the trustee.
Second, the trustee must manage the assets prudently. Under EPTL § 11-2.3—the New York Prudent Investor Act—a trustee is required to pursue an overall investment strategy that balances risk and return, reasonably suited to the entire portfolio. You cannot simply leave hundreds of thousands of dollars sitting in a zero-interest checking account while inflation erodes its purchasing power. Conversely, you cannot gamble trust funds on speculative tech stocks hoping for a quick windfall. You are required to invest as a prudent person would, often necessitating the hiring of financial advisors to ensure compliance with the statute.
Third, the trustee must manage distributions. The trust document dictates when and how money should be given to the beneficiaries. Some trusts mandate strict monthly payouts. Others give the trustee absolute discretion to distribute funds for a beneficiary’s health, education, maintenance, and support. Exercising this discretion requires a firm backbone, as trustees frequently have to say no to beneficiaries asking for money to fund ill-advised business ventures or luxury purchases.
The Duty to Inform and Account
One of the most heavily litigated areas in trust administration involves communication—or the lack thereof. Beneficiaries have a legal right to know how their inheritance is being managed. A trustee cannot operate in secrecy.
You must keep meticulous records of every single transaction. Every penny of income generated by trust assets, every dollar of principal spent on trust expenses, and every distribution made to a beneficiary must be accounted for. If the beneficiaries feel they are being kept in the dark, they can petition the Surrogate’s Court under SCPA Article 22 to compel a formal accounting.
A formal judicial accounting is an expensive, exhaustive process where the trustee must produce detailed schedules of all financial activity. If the court finds the trustee mismanaged funds, failed to pay taxes on time, or distributed assets improperly, the judge can issue a surcharge. This means the trustee is held personally liable and must pay out of their own pocket to make the trust whole. The shield of the trust does not protect a trustee from their own negligence.
Selecting a Custodian for Your Legacy
When I sit down with clients to draft their estate documents, the conversation about who to name as trustee is often the most difficult. Parents naturally want to name their children, usually out of a desire to treat everyone equally. But treating children equally in affection does not mean they are equally suited to manage a complex legal entity.
Stewardship.
That is the core requirement. You need someone who is organized, financially literate, and emotionally detached enough to follow the letter of the document rather than the emotional demands of the family. If your children do not get along now, naming one of them as trustee over the others is a guaranteed recipe for litigation.
In many cases, the most prudent choice is an independent professional or a corporate trustee. While they charge a fee for their services, they bring objectivity, professional investment management, and strict adherence to state law. They remove the emotional friction from the equation, allowing your family to remain a family rather than fracturing into a bitter divide between a fiduciary and their beneficiaries.
Choosing a trustee—or agreeing to serve as one—is a commitment that spans years and carries significant legal weight. Before you finalize your estate documents, or before you accept a nomination to manage a family member’s trust, you need to be certain the arrangement makes practical and legal sense. To evaluate your current fiduciary appointments or to discuss the administration of an active trust, schedule a beneficiary and trustee audit with our Manhattan office.
