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

A trustee is the person or institution legally responsible for holding, managing, and distributing the assets inside a trust for the benefit of the people the trust was created to help (the beneficiaries). In plain terms, a trustee does three things: protects the trust property, invests it prudently, and pays it out according to the trust’s written instructions and New York law. What makes the role serious is that a trustee is a fiduciary — held to the highest standard of good faith and loyalty the law recognizes. Under New York’s Estates, Powers and Trusts Law (EPTL) Article 7, which governs trusts in this state, a trustee must always act in the beneficiaries’ best interests, never their own. This guide walks through exactly what the job involves and gives you a practical checklist for the next steps to take if you have been named trustee.

The Core Job: What a Trustee Actually Does

Whether the trust is a revocable living trust you helped set up or an irrevocable trust you’ve been asked to administer, the day-to-day responsibilities are similar. A trustee:

• Takes control of trust assets — retitling property, opening trust bank and investment accounts, and securing real estate or valuables.
• Manages and invests prudently — under New York’s prudent-investor standard, the trustee invests for the long-term benefit of the trust rather than chasing risk or sitting in cash.
• Keeps detailed records — tracking every dollar in and out, because the trustee must eventually account to the beneficiaries.
• Pays bills, taxes, and expenses — including any required estate or income tax filings tied to the trust.
• Distributes income and principal — exactly as the trust document directs, when it directs, and to the people it names.
• Communicates with beneficiaries — answering reasonable questions and keeping them reasonably informed.

A trust is one of the main reasons New Yorkers choose trust-based planning over a will alone. A trust avoids probate and stays private, while a will is a public document that must be filed and proven in the Surrogate’s Court. If you want to understand that distinction before serving, see our overview of trust vs. will.

The Three Fiduciary Duties Every NY Trustee Owes

New York imposes three central fiduciary duties on every trustee. Understanding them is the difference between serving safely and exposing yourself to personal liability.

1. The Duty of Prudent Investment

New York has adopted the Prudent Investor Act under EPTL Article 11-A. This means a trustee must invest and manage trust assets as a prudent investor would — considering the purposes, terms, and distribution requirements of the trust. The standard looks at the overall portfolio, not any single investment in isolation. Diversification, reasonable costs, and a strategy matched to the trust’s goals are all part of the analysis. A trustee who simply leaves assets sitting idle, or who gambles them on a single speculative bet, can breach this duty.

2. The Duty of Loyalty

The duty of loyalty is the heart of being a fiduciary. The trustee must act solely in the interest of the beneficiaries. That means no self-dealing, no using trust assets for personal benefit, and no favoring one beneficiary over another unless the trust instructs it. Even the appearance of a conflict of interest should be avoided.

3. The Duty to Account

A trustee must keep accurate records and account to the beneficiaries — providing a clear, periodic report of all receipts, disbursements, gains, losses, and the current value of trust assets. Beneficiaries have the right to know what is happening with the property held for their benefit. Proper accounting is also the trustee’s best protection: clean records demonstrate that every action was honest and authorized.

Trustee Duties by Trust Type

Different trusts carry different sensitivities. The table below summarizes what a trustee should be especially mindful of.

Trust Type	Primary Purpose	Trustee’s Special Focus
Revocable living trust	Avoids probate, privacy, incapacity management	Honor the grantor’s right to amend/revoke while alive; manage smoothly if the grantor becomes incapacitated. Note: it does not save estate tax — assets stay in the taxable estate.
Irrevocable trust	Estate-tax reduction, asset protection, Medicaid planning	Respect that terms generally cannot be changed; coordinate with the 5-year Medicaid look-back; avoid acts that pull assets back into the taxable estate.
Supplemental / Special needs trust (SNT)	Preserves means-tested benefits for a disabled beneficiary	Under EPTL 7-1.12, distribute only in ways that supplement — never replace — Medicaid/SSI benefits, so eligibility is preserved.

If your trust falls into the third category, our special needs trust page explains the careful distribution rules in more detail. For a broad orientation to every trust type, start with our trusts overview.

A Practical Checklist: Your First Steps as Trustee

If you’ve just learned you’re serving as trustee, here is the order of operations to follow.

1. Read the entire trust document. Identify the beneficiaries, the distribution terms, and any specific powers or limits placed on you.
2. Obtain a tax ID (EIN) for the trust if one is required (typically for irrevocable trusts or after the grantor’s death).
3. Inventory and secure all assets. Locate accounts, deeds, and personal property; retitle them into the trust’s name.
4. Open dedicated trust accounts. Never commingle trust funds with your personal money.
5. Establish an investment plan consistent with the prudent-investor standard under EPTL Article 11-A.
6. Set up a recordkeeping system from day one so accounting later is straightforward.
7. Identify tax obligations — including New York estate tax exposure. For 2026, the New York basic exclusion is $7,350,000, with a “cliff” at 105% ($7,717,500); estates valued over the cliff lose the entire exemption, which makes precise valuation critical.
8. Communicate with beneficiaries early and in writing.
9. Make distributions only as the trust directs — and document each one.
10. Get professional guidance. Trustees are entitled to compensation under the commission schedules set out in New York’s SCPA and EPTL, and they may hire counsel and accountants. Getting it right protects both the trust and you personally.

Ongoing trust administration is not a one-time event — it continues for the life of the trust, and the duties above apply every step of the way.

Frequently Asked Questions

Can a trustee be held personally liable in New York?
Yes. A trustee who breaches a fiduciary duty — for example, by self-dealing, investing imprudently, or failing to account — can be held personally responsible to the beneficiaries for resulting losses. Acting transparently and documenting everything is the best protection.

Does a trustee get paid?
A trustee is generally entitled to compensation. New York’s SCPA and EPTL set out commission schedules that govern trustee compensation. The specific amount depends on the trust and the statutory framework, so it’s wise to confirm the applicable schedule before paying yourself.

Can the same person be trustee and beneficiary?
Often, yes — especially with a revocable living trust where the grantor serves as their own trustee and beneficiary. With irrevocable trusts and SNTs, however, mixing those roles can undermine the tax, asset-protection, or benefits goals, so professional guidance is essential.

What’s the difference between a trustee and an executor?
A trustee manages assets inside a trust, privately, under EPTL Article 7. An executor administers a deceased person’s estate through the public Surrogate’s Court probate process. One of the advantages of a trust is that it avoids that court proceeding entirely.

Talk to a New York Trusts Attorney

Serving as a trustee is a meaningful responsibility — and you don’t have to navigate it alone. Whether you’re stepping into the role or deciding who should serve in your own estate plan, the team at Morgan Legal Group can help you do it correctly under New York law.

Schedule a confidential consultation with Russel Morgan, Esq. today: Book your 30-minute consultation »