I recently sat with a couple in my office overlooking Madison Avenue. They had built a successful business and wanted a trust for their three children. Their eldest son was a responsible financial advisor. Their daughter was a teacher with a huge heart but little interest in money. Their youngest had a history of making impulsive decisions. “Who,” they asked, “could possibly be fair to all three?”
This is the central question of trust planning. It is not about documents; it is about people. Selecting a trustee is an act of profound trust—appointing a custodian for your family’s future. This person or institution will have a fiduciary duty to manage your assets for the well-being of your beneficiaries, not for their own gain. It is one of the most significant decisions you will make.
The Weight of Fiduciary Duty
A trustee is not just a manager. They are a fiduciary. This legal term carries significant weight in New York courts. It means your trustee has a legal obligation to act with undivided loyalty to the beneficiaries. They must avoid conflicts of interest, act impartially, and manage the trust’s assets with skill and care.
This is not a vague standard. New York’s Estates, Powers and Trusts Law (EPTL) § 11-2.3—our state’s Prudent Investor Act—requires a trustee to “exercise reasonable care, skill and caution” in making investment decisions. A well-meaning brother-in-law who invests the entire trust in a speculative startup has likely breached his fiduciary duty, regardless of his intentions.
Before you ask someone to take on this role, you must understand what you are asking. It is a demanding job with significant legal exposure if handled incorrectly. Stewardship.
The Family Trustee: A Matter of Heart and Head
The first instinct is often to name a family member—a sibling, an adult child, a cousin. The logic is clear. This person knows your family, understands the personalities involved, and presumably shares your values. They are on the ground, able to see if a beneficiary truly needs a distribution for a down payment or is asking for money to fuel a bad habit.
For many families, this is the right choice. A trusted relative can provide a personal touch that a corporate entity never could. They also do not charge professional fees, which can preserve the value of a smaller trust.
However, I have seen this arrangement create deep fractures in families. Appointing one child as trustee over their siblings can invert the family hierarchy and breed resentment. What happens when one sibling must deny a distribution to another? The trustee is caught between their legal duty and their family relationship. It is a heavy burden.
The Corporate Trustee: Professional and Impartial
The alternative is a corporate trustee, such as the trust department of a bank or a dedicated trust company. The immediate advantage is professionalism. This is what they do. They are experts in investment management, tax compliance, and the administrative record-keeping that Surrogate’s Court demands.
A corporate trustee offers impartiality and continuity. They are not swayed by family drama. They make decisions based on the terms of the trust document—and only the trust document. Unlike an individual, an institution does not get sick, move away, or pass away. The management is seamless and perpetual.
This professionalism comes at a cost. Corporate trustees charge fees, typically a percentage of the assets under management. For smaller trusts, these fees can be prohibitive. For some families, the institutional approach can feel cold and impersonal. The bank may not appreciate the nuance of why one beneficiary needs more help than another at a particular moment.
A Third Path: The Co-Trustee Model
You do not have to choose one or the other. For many estates, particularly larger or more complex ones, a hybrid approach works best. You can name a family member and a corporate trustee to serve together as co-trustees.
This structure balances personal insight with professional management. The family member provides the understanding of the family’s needs. The corporate trustee handles the investments, accounting, and tax filings, ensuring all actions comply with New York law. They work together, with the trust document defining their roles and how to resolve disagreements.
Choosing the right steward for your trust is a decision that requires deliberate and thoughtful consideration. It is about anticipating the needs of your beneficiaries and the potential for conflict decades from now.
The first step is to candidly assess your assets and the personalities of your beneficiaries. With that picture in mind, we can outline the duties a trustee must perform—creating a job description for the role. To schedule a confidential review of your family’s situation and define this role, call my office.
