A client recently came to our Manhattan office with a thick binder. Her sister had named her as the successor trustee for a trust benefiting her two young children. She was honored, but also overwhelmed. “I have this document,” she said, “but what does it actually mean I’m supposed to do with her assets, her home, her legacy? What power do I really have?”
This is a question I hear often. Being named a trustee is an act of profound trust, but it is not a promotion or an honorary title. It is a job—a serious one—with significant responsibilities and legal obligations. A trustee’s power is not absolute. It is a delegated authority, granted for a specific purpose: to act as a steward for someone else’s assets on behalf of the beneficiaries.
The entire framework of a trustee’s power rests on one central concept: fiduciary duty. This is the highest standard of care recognized in law. It means a trustee must act with complete loyalty and good faith, placing the interests of the beneficiaries above all others—including their own.
The Source and Scope of a Trustee’s Authority
A trustee’s power flows from two primary sources: the trust document itself and New York law. The trust agreement is the constitution for the trustee’s role. It outlines the grantor’s specific wishes—who gets what, when, and under what conditions. It may grant broad, flexible powers or impose strict limitations.
Where the document is silent, state law fills in the gaps. In New York, the Estates, Powers and Trusts Law (EPTL) provides a set of default powers. These allow a trustee to manage and protect trust property. The core powers typically include:
- Taking Custody of Assets: The trustee’s first job is to identify and take legal control of all trust property. This could mean retitling a brokerage account into the name of the trust, recording a new deed for real estate, or collecting life insurance proceeds.
- Investing and Managing Assets: A trustee cannot simply let assets sit idle. They have a duty to make the trust property productive. This is governed by the Prudent Investor Act, found in EPTL § 11-2.3, which requires a trustee to exercise the skill and caution that a prudent person would in managing their own affairs. This involves diversifying investments and balancing risk against the needs of the beneficiaries.
- Making Distributions: This is perhaps the most visible power. The trustee distributes income and principal to the beneficiaries according to the trust’s instructions. This might be a straightforward monthly payment or a complex discretionary decision based on a beneficiary’s needs for health, education, or support.
- Handling Administrative Tasks: A trustee is also responsible for the day-to-day work of the trust. This includes keeping meticulous records, paying the trust’s bills and expenses, and filing annual income tax returns.
The Hard Lines: What a Trustee Cannot Do
Understanding a trustee’s limitations is just as important as understanding their powers. Fiduciary duty creates clear boundaries that cannot be crossed. Acting beyond these boundaries can expose a trustee to personal liability and removal by the Surrogate’s Court.
The most fundamental prohibition is against self-dealing. A trustee can never use their position for personal gain. They cannot borrow money from the trust, sell trust property to themselves, or buy assets from themselves for the trust—even if the price seems fair. The conflict of interest is absolute. For instance, a trustee managing a trust that owns a family business cannot vote to give themselves an exorbitant salary that harms the beneficiaries’ financial interests.
Furthermore, a trustee cannot delegate their core decision-making responsibilities. While it is prudent and often necessary to hire professionals—accountants, financial advisors, attorneys—the ultimate accountability remains with the trustee. They are the ones who must weigh the advice and make the final call. The stewardship cannot be outsourced.
Finally, a trustee cannot simply ignore the terms of the trust agreement. Even if a trustee believes a different course of action would be “better” for a beneficiary, they are bound by the grantor’s written instructions. The document is paramount. If a term is unclear or impossible to carry out, the trustee’s proper course is to seek guidance from the court, not to invent a new plan.
Stewardship in Practice
Serving as a trustee is a demanding role that requires diligence, impartiality, and a clear understanding of both the powers granted and the duties imposed. The role is less about wielding power and more about exercising careful judgment—ensuring a legacy is protected and a family is provided for as intended.
For the client in my office, we walked through her sister’s trust document line by line, translating the legal language into a practical roadmap. The “power” she was given was really a set of tools to carry out her sister’s plan. Seeing it that way—as a defined mission of stewardship—transformed her anxiety into a sense of purpose.
If you have been appointed as a trustee or are selecting one for your own estate plan, you must fully understand the responsibilities involved. We can schedule a fiduciary review to clarify the specific duties and powers outlined in your trust document, ensuring you are prepared to fulfill your role effectively.
