What Does a Trustee Do in New York? A Step-by-Step Duties Guide

Reviewed by Albert Goodwin, Esq., New York estate and trust attorney (admitted to practice in New York). Last updated: June 2024.

If you have just been named trustee of a New York trust, your job is to administer the trust property for the benefit of the beneficiaries, exactly according to the terms of the trust instrument and New York law. This guide explains, in practical order, what a New York trustee actually does — from accepting the appointment through final distribution — and which statutes govern each step. It is written for the new or active trustee who needs to understand the task in front of them, not for someone considering litigation.

This page focuses on a trustee's duties. If your concern is a trustee who has done something wrong, see our pages on breach of fiduciary duty, breach of trust, and a beneficiary's right to trust information.

Who is a trustee and what is the trustee's basic job?

A trustee is the person or institution that holds legal title to the trust property and manages it for the benefit of the beneficiaries, while the grantor (also called the settlor or trustor) is the person who created the trust and transferred property into it. Once the trust is funded, the trustee — not the grantor — is the legal owner of the trust assets and signs documents in a representative capacity, for example as "Jane Smith, as Trustee of the Smith Family Trust."

In New York, a trustee is a fiduciary. That status carries the duties of loyalty, prudence, impartiality, and full disclosure, and it is enforceable in the Surrogate's Court or Supreme Court. The trustee's powers come from two sources: the trust instrument itself, and the default powers New York grants under the Estates, Powers and Trusts Law (EPTL). Everything below describes how a New York trustee carries out that role in practice.

Step 1: Decide whether to accept the appointment

Being named trustee in a document does not force you to serve. You may accept or decline the position. If you decide to serve, accept formally and in writing; if you decline, renounce promptly so a successor trustee can step in. Read the trust instrument carefully before accepting, because once you act on behalf of the trust you have accepted the role and its duties.

For a testamentary trust (one created under a will), the trustee is appointed by the Surrogate's Court and receives letters of trusteeship, which are the official credentials proving authority to act. For an inter vivos (living) trust, the trustee usually has authority directly from the trust instrument without court appointment, although court involvement can still occur if there is a dispute or a proceeding to settle accounts.

Step 2: Identify, secure, and inventory the trust assets

One of the first practical duties is to take control of the trust property and protect it. This includes retitling assets into the name of the trust, securing real property and valuables, obtaining a separate Employer Identification Number (EIN) for the trust where required, and opening trust bank or brokerage accounts so trust funds are never commingled with the trustee's own money.

• Locate and gather account statements, deeds, stock certificates, life insurance, and business interests.
• Confirm which assets are actually titled in the trust — assets the grantor never transferred are generally not trust property.
• Value the assets as of the relevant date and keep written records of how values were determined.
• Maintain insurance on real estate, vehicles, and other insurable property.

The duty not to commingle is fundamental in New York. Keeping trust assets separate and clearly identified is the foundation for the accounting you will later have to produce.

Step 3: Read the trust instrument and understand your powers

The trust instrument is your operating manual. It tells you who the beneficiaries are, when and how they receive distributions, whether distributions are mandatory or discretionary, and what specific powers the grantor gave you. Where the instrument is silent, New York's default fiduciary powers under EPTL 11-1.1 fill the gap, unless the instrument or a court order limits them. In plain terms, those default powers let a New York trustee:

• Hold and add property — accept additional assets into the trust and acquire outstanding interests in property the trust already partly owns.
• Invest and reinvest — buy, sell, and manage investments (subject to the prudent investor rule discussed below).
• Insure — purchase insurance to protect the property, the trust, and the trustee.
• Manage real estate — collect rents, make ordinary repairs, sell at public or private sale, lease for up to ten years, or mortgage trust real property.
• Handle mortgages and claims — continue, renew, or foreclose mortgages held by the trust, and contest, settle, or compromise claims for or against the trust.
• Pay expenses and taxes — pay assessments, taxes, and reasonable costs of administration.
• Distribute and document — make distributions to beneficiaries and execute the contracts and documents needed to run the trust.

The practical point is that these are tools, not obligations. You must exercise each power only when doing so serves the beneficiaries and is consistent with the trust's purpose. A power to sell does not mean a sale is wise; a power to invest does not excuse an imprudent investment.

Step 4: Invest trust assets under New York's prudent investor rule

New York's Prudent Investor Act, EPTL 11-2.3, governs how a trustee invests. It does not judge any single investment in isolation; it evaluates the trustee's conduct in the context of the entire portfolio and an overall investment strategy with risk and return objectives reasonably suited to the trust. Key obligations include:

• Diversify the trust's investments unless the trustee reasonably determines that special circumstances make it prudent not to.
• Consider the trust's purposes and beneficiaries, including the need to balance current income beneficiaries against remaindermen (the duty of impartiality).
• Incur only reasonable costs appropriate to the trust and the investment decisions.
• Pursue an overall strategy rather than reacting to individual stocks in isolation.

EPTL 11-2.3 also permits a trustee who lacks investment expertise to delegate investment functions to a qualified agent, provided the trustee exercises care in selecting the agent, defines the scope of the delegation, and periodically reviews the agent's performance. A related statute, the New York Uniform Principal and Income Act (EPTL Article 11-A), governs how the trustee allocates receipts and disbursements between principal and income — an important task when one beneficiary is entitled to income and another to principal.

Step 5: Keep records and communicate with beneficiaries

A trustee must keep complete, accurate, and contemporaneous records of every receipt, disbursement, and transaction. Good recordkeeping is not optional bookkeeping — it is the evidence that protects the trustee when an accounting is demanded or challenged.

New York also imposes a duty to keep beneficiaries reasonably informed. Beneficiaries are generally entitled to information about the trust, its assets, and its administration so they can protect their interests. For a deeper discussion of exactly what information must be shared and when, see our page on beneficiaries' rights to trust information.

Step 6: Pay debts, expenses, and taxes

The trustee pays legitimate trust expenses, debts properly chargeable to the trust, and applicable taxes before making discretionary distributions that could leave obligations unfunded. Tax filings a New York trustee may need to handle include:

• Federal Form 1041 (U.S. Income Tax Return for Estates and Trusts) and the corresponding New York fiduciary return (Form IT-205) where the trust has taxable income.
• Schedule K-1 to report income passed through to beneficiaries.
• Coordination with estate tax filings where the trust arises from a decedent's estate.

Because trust taxation is technical, many trustees work with an accountant; the trustee remains responsible for seeing that filings are made and taxes are paid on time.

Step 7: Make distributions according to the trust's terms

Distributions must follow the instrument. If distributions are mandatory (for example, "distribute all net income quarterly"), the trustee must make them on schedule. If they are discretionary (for example, distributions for a beneficiary's "health, education, maintenance, and support"), the trustee must exercise judgment reasonably, consider each beneficiary's needs and the trust's resources, document the basis for each decision, and treat beneficiaries impartially where the instrument requires it. A trustee who makes distributions arbitrarily, or who favors one beneficiary over another without authority, risks personal liability.

Step 8: Account to the beneficiaries and, when appropriate, the court

Accounting is a central trustee duty in New York. A trustee should prepare periodic accountings showing all assets received, income earned, disbursements made, gains and losses, commissions taken, and the property remaining on hand. There are two common paths:

• Informal (out-of-court) accounting: The trustee provides a written account to the beneficiaries, who can review it and sign releases approving it. This is faster and less expensive when relationships are cooperative.
• Judicial accounting: Under the Surrogate's Court Procedure Act (SCPA), the trustee files a formal account in the Surrogate's Court — voluntarily or because a beneficiary compels it — and the court can settle and approve the account. A decree settling the account provides the trustee with finality and protection from later claims regarding the period covered.

For more on the accounting process and what beneficiaries can demand, see our trust and estate accountings page.

Trustee commissions: what a New York trustee may be paid

A trustee is generally entitled to compensation. Where the trust instrument does not fix compensation, SCPA 2309 provides the statutory commission schedule for trustees. In general terms, SCPA 2309 allows an annual commission based on a percentage of principal, computed on a sliding scale, plus a separate commission on income collected, with rates that step down as the value of the trust principal increases. The statute also addresses how commissions are allocated and when court approval may be needed. Commissions must be calculated and taken correctly and disclosed in the accounting; a trustee who takes excessive or unsupported commissions can be surcharged.

The core fiduciary duties a New York trustee must honor

Every step above is governed by the trustee's underlying fiduciary duties:

• Duty of loyalty — act solely in the beneficiaries' interest and avoid self-dealing and conflicts of interest.
• Duty of prudence/care — manage the trust with the care, skill, and caution of a prudent person, especially in investing under EPTL 11-2.3.
• Duty of impartiality — balance the competing interests of income and remainder beneficiaries fairly.
• Duty to inform and account — keep beneficiaries reasonably informed and render accurate accountings.
• Duty not to commingle — keep trust property separate and clearly earmarked.

New York courts have long held trustees to a high standard of conduct. As Judge Cardozo famously stated in Meinhard v. Salmon, 249 N.Y. 458 (1928), a fiduciary is held to "not honesty alone, but the punctilio of an honor the most sensitive." A trustee who breaches these duties can be removed and surcharged. The mechanics of breach claims, surcharge, and damages are covered on our breach of fiduciary duty page rather than here.

Frequently asked questions about being a trustee in New York

Do I have to go to court to be a trustee?

It depends on the type of trust. A testamentary trustee is appointed and issued letters of trusteeship by the Surrogate's Court. A trustee of a living trust usually serves directly under the trust instrument without a court appointment, but may still appear in court to settle accounts or resolve disputes.

Can a trustee also be a beneficiary?

Yes. It is common for a trustee to also be one of the beneficiaries. The trustee must still administer the trust impartially and avoid using trust property for personal benefit beyond what the instrument allows.

How often must a New York trustee account?

The trust instrument may set an interval, and beneficiaries can request information. A trustee should account at reasonable intervals (commonly annually) informally, and may file a judicial accounting in the Surrogate's Court when finality or court approval is needed.

Can a trustee resign?

Yes, but a trustee cannot simply walk away. Resignation typically requires following the procedure in the trust instrument or obtaining court approval, ensuring a successor trustee is in place, and accounting for the administration period before being relieved of duties.

What happens if there is no named successor trustee?

If a trust has no acting or named successor trustee, an interested party can petition the Surrogate's Court to appoint one so the trust does not fail for lack of a trustee.

Can a bank serve as trustee?

Yes. A corporate trustee such as a bank or trust company can serve and is held to the same fiduciary standards. See our page on a bank serving as trustee for the considerations involved.

Speak with a New York trust attorney

Serving as a trustee carries real responsibility, and the safest course is to administer the trust carefully, document your decisions, and get advice before acting when the instrument or the law is unclear. If you have been appointed a trustee in New York and want guidance on your duties, accounting, investing, distributions, or commissions, the Law Offices of Albert Goodwin can help. We have offices in New York City, Brooklyn, NY, and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].

This article is for general information about New York trustee duties and is not legal advice. Laws change and every trust is different; consult a qualified attorney about your specific situation.