Role of a Trustee of a Trust in New York
A trustee stands at the center of every New York trust, charged with safeguarding property for the benefit of others. Because a trustee occupies a position of confidence and control, New York law imposes exacting fiduciary standards. Missteps can lead to personal liability—or even removal by the Surrogate’s Court. This post breaks down the legal framework, day-to-day tasks, common pitfalls, and practical tips for trustees (and the beneficiaries who hold them accountable).
1. What Is a Trustee Under New York Law?
A trustee is the person or institution named in a trust agreement to hold and manage trust assets for the beneficiaries. In New York, trustees derive their authority primarily from:
- Estates, Powers & Trusts Law (EPTL) §§ 7-1.1 to 7-1.17 – creation and validity of express trusts
- EPTL Article 11 – fiduciary powers, prudent investor duties, compensation
- Surrogate’s Court Procedure Act (SCPA) Article 22 – judicial proceedings involving trustees
2. Role of a Trustee of a Trust in New York – Core Fiduciary Duties of a New York Trustee
- Duty of Loyalty – Act solely in the best interest of beneficiaries; avoid self-dealing or conflicts (EPTL § 11-2.3[b][2]).
- Duty of Prudence – Invest and manage assets “as a prudent person would,” in line with the New York Prudent Investor Act (EPTL § 11-2.3).
- Duty to Segregate & Safeguard Assets – Keep trust property separate from personal or other funds.
- Duty to Account – Maintain complete records and provide formal or informal accounts to beneficiaries and, if necessary, the court (SCPA § 1507).
- Duty of Impartiality – Balance the interests of income and remainder beneficiaries.
- Duty to Furnish Information – Respond to reasonable beneficiary inquiries and keep them informed.
3. Statutory & Case-Law Framework for Role of a Trustee of a Trust in New York
- EPTL Article 11 – Defines trustee powers and standards of care.
- Uniform Prudent Investor Act (UPIA) – Incorporated into EPTL; guides investment decisions.
- SCPA § 2102 & § 2103 – Allow trustees to petition the Surrogate’s Court for guidance or turnover of assets.
4. Day-to-Day Responsibilities
- Collect & secure assets (deeds, brokerage accounts, valuables).
- Invest prudently—diversify according to risk/return objectives.
- Pay taxes—federal and NYS fiduciary income tax returns (Form 1041; IT-205).
- Make timely distributions per trust terms (income, principal, discretionary support).
- Maintain books & records—general ledger, receipts, disbursements, valuations.
- Communicate—issue annual statements; respond to beneficiary questions.
5. Trustee Liability & Breach of Fiduciary Duty
A trustee may be surcharged (personally liable) for losses caused by:
- Unauthorized investments
- Self-dealing or conflicts of interest
- Failure to diversify (see Janes)
- Neglecting to file tax returns, causing penalties
- Improper or untimely distributions
Beneficiaries may file a compulsory accounting (SCPA § 2205) or petition for removal (SCPA § 711) if the trustee acts improperly.
6. How Trustees Can Protect Themselves
- Retain qualified counsel early—proactive advice beats crisis management.
- Engage professional advisors—CPAs, investment managers, appraisers.
- Seek judicial instructions under SCPA § 2107 for ambiguous provisions.
- Obtain beneficiary releases upon distribution or resignation.
- Consider a fiduciary bond for added protection (SCPA § 710).
- Document everything—meeting minutes, correspondence, investment rationale.
7. Removing or Replacing a Trustee in New York
Grounds include misconduct, hostility with beneficiaries, insolvency, or failure to produce an accounting. Beneficiaries—or co-trustees—may petition under SCPA § 711. Courts will weigh the trust’s best interests and may appoint a successor corporate or individual trustee.
8. How RK Law PC Helps Trustees & Beneficiaries – Role of a Trustee of a Trust in New York
- Trustee counseling – Ongoing advice to minimize risk.
- Beneficiary advocacy – Compel accountings, investigate mismanagement.
- Litigation – Pursue or defend surcharge, removal, and turnover proceedings.
- Mediation – Resolve intra-family disputes without expensive court battles.
9. Frequently Asked Questions for Role of a Trustee of a Trust in New York
Unless the trust instrument states otherwise, a trustee should provide at least annual statements and must file a formal accounting when ordered by the court or requested by beneficiaries entitled to more than two-thirds of the trust income.
Yes. EPTL § 11-1.5 sets reasonable compensation, often a percentage of trust assets or income, subject to court approval in contested matters.
Yes—under EPTL § 11-2.3(c), but the trustee must exercise due care in selecting and monitoring agents.
An out-of-state trustee may need to designate a New York resident agent for service of process and comply with NYS tax and bonding rules.
10. Conclusion on Role of a Trustee of a Trust in New York
Serving as a trustee in New York is both an honor and a legal minefield. By understanding statutory duties, maintaining transparent records, and seeking timely professional guidance, a trustee can fulfill the grantor’s intent while avoiding costly litigation. RK Law PC’s trust and estate attorneys stand ready to advise trustees and beneficiaries across the five boroughs and beyond.
For more information, please contact NYC Probate Litigation, Guardianship, Probate, and Estate Planning attorney Regina Kiperman:
Phone: 917-261-4514
Fax: 929-556-2089
Email: rkiperman@rklawny.com
Or visit her at:
40 Wall Street
Suite 2508
New York, NY 10005
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