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 in a trust for the benefit of others — and under New York law, that role carries some of the highest legal obligations a person can accept. In short, a trustee holds and administers trust property, makes prudent investment decisions, follows the instructions written into the trust document, treats the beneficiaries fairly, and accounts to them for everything that happens to the money. These responsibilities are called fiduciary duties, and New York’s Estates, Powers and Trusts Law (EPTL) Article 7 governs how they must be carried out. Below, we answer the most common questions New Yorkers ask about what a trustee actually does.

What Is a Trustee, and How Is the Role Created?

When you create a trust, you transfer legal title of certain assets to a trustee. That trustee does not own the assets personally — they hold them in trust for the people you name as beneficiaries. In a revocable living trust, you (the grantor) often serve as your own trustee during your lifetime and name a successor trustee to take over if you become incapacitated or pass away. In an irrevocable trust, you typically name someone else as trustee from the start, because giving up control is exactly what makes those trusts effective for estate-tax reduction and asset protection.

The trustee’s powers and duties come from two sources: the trust document itself and New York statute (EPTL Article 7 and the Prudent Investor Act, EPTL Article 11-A). For a broader explanation of how each type of trust functions, see our trusts overview.

What Are a Trustee’s Core Fiduciary Duties Under New York Law?

New York imposes three central fiduciary duties on every trustee:

Duty	What It Means in Practice	Source
Duty of Loyalty	The trustee must act solely in the interest of the beneficiaries — no self-dealing, no personal profit, no conflicts of interest.	EPTL Article 7
Prudent-Investor Standard	The trustee must invest and manage trust assets as a prudent investor would, considering risk, return, and diversification.	EPTL Article 11-A
Duty to Account	The trustee must keep accurate records and provide beneficiaries with a regular accounting of income, expenses, and distributions.	EPTL Article 7

These duties are not optional courtesies — they are enforceable legal obligations. A beneficiary who believes a trustee has breached them can petition the Surrogate’s Court for an accounting or for the trustee’s removal.

The Duty of Loyalty

Loyalty is the heart of the trustee relationship. A trustee cannot use trust assets for personal benefit, cannot favor one beneficiary over another (unless the trust says so), and cannot enter into transactions that create a conflict of interest. Even an honest mistake that benefits the trustee can be a breach.

The Prudent-Investor Standard

Under EPTL Article 11-A, a trustee must manage trust investments the way a reasonably careful, skilled investor would — focusing on the overall portfolio rather than any single asset, and balancing growth against the need to preserve principal. Reckless speculation or letting assets sit idle can both be breaches of this standard.

The Duty to Account

Beneficiaries have a right to know what is happening with the trust. A trustee must keep detailed records and provide periodic accountings. Proper trust administration — paying taxes, filing returns, and documenting every distribution — is a major part of this duty.

Does the Type of Trust Change What the Trustee Does?

Yes. The trustee’s day-to-day job depends heavily on which trust they are administering:

• Revocable living trust — During the grantor’s life, the trustee (often the grantor) manages assets normally. The real work begins at incapacity or death, when the successor trustee steps in to manage and distribute assets without probate, keeping the estate private. Note: a revocable trust does not reduce estate tax — the assets remain in the taxable estate.
• Irrevocable trust — The trustee manages assets that the grantor has permanently given up, which is what allows these trusts to be used for estate-tax reduction, asset protection, and Medicaid planning (subject to the 5-year look-back). The trustee must respect the irrevocable terms strictly.
• Supplemental (Special) Needs Trust — Under EPTL 7-1.12, the trustee of a special needs trust must make distributions carefully so the disabled beneficiary keeps eligibility for means-tested benefits like Medicaid and SSI. A careless distribution can cost the beneficiary their benefits.

How Does Having a Trustee Differ From Having an Executor Under a Will?

This is one of the most common points of confusion. A trust avoids probate and stays private; a will is a public document that must be filed and probated in the Surrogate’s Court. The trustee administers the trust; the executor administers the probate estate. Many New Yorkers use both — a will as a backstop and a trust as the primary tool. Our trust vs. will comparison breaks down the differences in detail.

How Does the New York Estate Tax Affect a Trustee’s Job?

A trustee must be aware of New York’s estate tax thresholds when planning distributions and managing assets. For 2026, the basic exclusion amount is $7,350,000. New York also has a notorious “cliff”: an estate valued at more than 105% of the exclusion — $7,717,500 — loses the entire exemption, not just the excess. A trustee administering a large estate must coordinate with counsel to avoid tipping over that cliff, which is why irrevocable trusts are often used to move assets out of the taxable estate.

Is a Trustee Paid?

Yes. New York law provides for trustee compensation through commission schedules set out in the Surrogate’s Court Procedure Act (SCPA) and EPTL. We do not quote specific figures here because the applicable commission depends on the trust terms, the type and value of assets, and the services performed — a statutory schedule exists, and your attorney can explain exactly how it applies to your situation.

Frequently Asked Questions

Can a trustee be a beneficiary of the same trust?
Yes, this is common (especially in revocable trusts), but the trustee must still honor the duty of loyalty and treat all beneficiaries fairly. Conflicts must be managed carefully.

What happens if a trustee breaches a fiduciary duty?
A beneficiary can petition the Surrogate’s Court to compel an accounting, surcharge the trustee for losses, or remove the trustee. Breaches of loyalty or imprudent investing are the most common grounds.

Do I have to name a professional trustee?
No. You can name a trusted family member, friend, attorney, or a corporate trustee such as a bank’s trust department. Larger or more complex trusts often benefit from a professional trustee experienced in EPTL compliance.

Does naming a trustee avoid probate?
A funded trust avoids probate for the assets it holds. Assets left outside the trust — through a will alone — must still pass through the Surrogate’s Court.

Speak With a New York Trust Attorney

Serving as a trustee — or choosing the right one — is a serious legal responsibility. At Morgan Legal Group, Russel Morgan, Esq. and our team help New Yorkers statewide create trusts and guide trustees through their fiduciary duties under the EPTL with confidence.

Schedule your consultation with Russel Morgan, Esq. →