What Does a Trustee Do? Fiduciary Duties Under New York Law

A trustee is the person or institution legally responsible for managing the assets held inside a trust and distributing them according to the trust’s instructions, all for the benefit of the people named to receive them (the beneficiaries). In New York, a trustee is a fiduciary, which means the law holds them to the highest standard of care and good faith known to our legal system. Under the New York Estates, Powers and Trusts Law (EPTL) Article 7, a trustee must invest prudently, act with undivided loyalty to the beneficiaries, and keep accurate records that they can be required to account for. In short, a trustee is a guardian of someone else’s money, with personal legal liability if they fail to do the job properly.

If you have been named as a trustee, asked to serve as one, or are simply trying to understand who will manage your trust after you create it, this plain-English overview explains the role from the ground up.

What Is a Trust, and Where Does the Trustee Fit In?

A trust is a legal arrangement involving three roles:

• The grantor (sometimes called the settlor or trustor) — the person who creates the trust and transfers assets into it.
• The trustee — the person or institution who holds legal title to those assets and manages them.
• The beneficiary — the person or people who benefit from the assets.

With a revocable living trust, the grantor often serves as their own trustee during their lifetime, keeping full control to amend or revoke the trust at any time. A successor trustee then steps in upon the grantor’s death or incapacity. With an irrevocable trust, the grantor generally gives up control, and an independent trustee manages the assets — a structure used for estate-tax reduction, asset protection, and Medicaid planning (subject to the five-year look-back period).

To understand how the different trust types compare, our trusts overview page walks through each option in detail.

The Core Job: What a Trustee Actually Does Day to Day

The trustee’s responsibilities are practical as well as legal. A trustee typically must:

1. Take control of and inventory the trust assets — bank accounts, real estate, investments, and personal property.
2. Invest and manage those assets prudently so they grow or are preserved over time.
3. Make distributions to beneficiaries according to the exact terms written in the trust document.
4. Keep meticulous records of every transaction, contribution, and distribution.
5. File tax returns and handle the trust’s tax obligations.
6. Communicate with beneficiaries and provide them with information about the trust.
7. Account to the beneficiaries, formally reporting how the assets have been managed.

For many families, the day-to-day burden of these tasks is why they hire professionals to handle trust administration rather than leaving an untrained family member to navigate it alone.

The Three Fiduciary Duties Under New York Law

New York law imposes specific, enforceable duties on every trustee. Three stand at the center of the role.

1. The Duty to Invest Prudently (The Prudent-Investor Standard)

Under EPTL Article 11-A, New York follows the prudent-investor standard. A trustee may not gamble with trust assets or leave them sitting idle. Instead, the trustee must manage the portfolio the way a careful, reasonable investor would — considering the trust’s purpose, the needs of the beneficiaries, diversification, risk, and return. The trustee is judged on the overall strategy and the process they followed, not on whether any single investment happened to go up or down.

2. The Duty of Loyalty

A trustee must act solely in the interest of the beneficiaries. This is the duty of loyalty, and it is strict. A trustee may not use trust assets for personal benefit, may not favor one beneficiary over another in violation of the trust terms, and may not engage in self-dealing — for example, buying trust property for themselves at a discount. Even the appearance of a conflict of interest can expose a trustee to liability.

3. The Duty to Account

A trustee must keep clear records and provide beneficiaries with an accounting — a detailed report of what came into the trust, what went out, and what remains. Beneficiaries have the right to demand this information, and if a trustee refuses or the records are inadequate, a beneficiary can petition the court to compel a formal accounting. Trustee commissions in New York are set by statutory schedules under the SCPA and EPTL; a trustee is entitled to reasonable compensation, but it is governed by those rules rather than left to the trustee’s discretion.

A Special Case: The Supplemental (Special) Needs Trust

Some trusts carry duties that are especially sensitive. A supplemental needs trust (SNT), authorized under EPTL 7-1.12, allows assets to be held for a disabled beneficiary without disqualifying them from means-tested government benefits like Medicaid and SSI. The trustee of an SNT must understand benefit eligibility rules and make distributions only for permitted “supplemental” needs — a single careless payment can jeopardize the beneficiary’s benefits. If your planning involves a loved one with a disability, our special needs trust page explains how these protections work.

Trustee vs. Executor: Why a Trust Differs From a Will

People often confuse a trustee with an executor. The difference comes down to trusts versus wills:

	Trustee (Trust)	Executor (Will)
Governing document	A trust agreement	A last will and testament
Court involvement	Generally avoids probate	Must be probated in Surrogate’s Court
Privacy	Private	Public record
When the role begins	Often during the grantor’s life	Only after death

Because a trust avoids probate and keeps your affairs private, many New Yorkers use one alongside their will. Our trust vs. will page compares the two side by side.

A Note on New York Estate Tax

Trustees and grantors should also keep New York’s estate tax in mind. For 2026, the basic exclusion amount is $7,350,000. New York applies a “cliff”: estates valued at more than 105% of the exclusion — $7,717,500 — lose the entire exemption, not just the excess. A revocable living trust does not reduce this tax, because the assets remain part of your taxable estate. Irrevocable trusts are the planning tool used to move assets out of the taxable estate. This is one of the most important reasons to plan with experienced counsel.

Frequently Asked Questions

Can I be the trustee of my own trust?
Yes. With a revocable living trust, you typically serve as your own trustee during your lifetime, retaining full control to manage, amend, or revoke the trust. You name a successor trustee to take over upon your incapacity or death.

Does a trustee get paid?
Yes. A trustee is entitled to reasonable compensation. New York sets trustee commissions through statutory schedules under the SCPA and EPTL rather than leaving the amount to negotiation.

Can a beneficiary remove or sue a trustee?
A beneficiary who believes a trustee has breached their duties — for example, by self-dealing or mismanaging investments — can petition the Surrogate’s Court to compel an accounting and, in appropriate cases, to remove the trustee or hold them personally liable.

Should I name a family member or a professional as trustee?
It depends on the trust’s complexity. A family member may be fine for a simple trust, but trusts involving tax planning, asset protection, or a special needs beneficiary often call for a professional trustee who understands the prudent-investor standard and benefit rules.

Talk to a New York Trust Attorney

Choosing the right trustee — and understanding the duties that come with the role — is one of the most consequential decisions in your estate plan. At Morgan Legal Group, Russel Morgan, Esq. and our team help New York families build trusts that work and trustees who understand their obligations.

Schedule your consultation with Russel Morgan, Esq. to make sure your trust and your trustee are set up for success.