Mr. Goodwin is everything you want in an attorney: professional, honest, thorough, and genuinely caring. He always explains things clearly, so I understood exactly what was happening and what to expect next. His attention to detail and persistence really stood out. Looking back, I feel lucky to have found him. He guided me through the whole process expertly, and I deeply appreciate all his hard work. Would definitely recommend him to anyone needing legal help.
Call Today:
212-233-1233
Trustee vs. Beneficiary: Who Has More Rights Over a New York Trust?
The short answer under New York law is that neither a trustee nor a beneficiary has more rights in the abstract. They hold different rights, designed to check one another. The trustee holds legal title and the power to manage and invest the trust assets; the beneficiary holds the equitable, or beneficial, interest and the enforceable right to make the trustee act prudently, loyally and transparently. In practice the balance shifts the moment a trustee oversteps. When the two clash, the Surrogate’s Court decides, and the statutes that govern the contest are in the Estates, Powers and Trusts Law (EPTL) and the Surrogate’s Court Procedure Act (SCPA).
This page focuses on how those rights collide and how New York courts resolve the conflict. For a closer look at a single topic, see our pages on a beneficiary’s right to trust information, trust and estate accountings, breach of fiduciary duty, and removing a fiduciary in New York.
The rights at a glance: trustee versus beneficiary under New York law
| Issue | Trustee | Beneficiary | NY statutory anchor |
|---|---|---|---|
| Title to assets | Holds legal title; can buy, sell, lease and litigate over trust property | Holds the equitable or beneficial interest; cannot directly control assets | EPTL Art. 7 |
| Investment control | Power to invest, but bound by the Prudent Investor Act | Right to demand prudent, diversified management | EPTL 11-2.3 |
| Income vs. principal | Independent trustee may adjust between income and principal | Right to challenge an unreasonable adjustment | EPTL 11-2.3-A; EPTL Art. 11-A |
| Information | Duty to keep beneficiaries reasonably informed | Right to the trust terms and administration details | Common law; EPTL 11-1.7 |
| Accounting | Accounts when a beneficiary asks, when the trust ends, or when the court requires it | Right to petition to compel a judicial accounting | SCPA 2205, 2206, 2208, 2209, 2211 |
| Compensation | Entitled to statutory commissions | Right to object to excessive or forfeited commissions | SCPA 2308, 2309 |
| Removal | May resign; can be removed for cause | Right to petition for suspension or removal | SCPA 711, 719 |
| Self-dealing | Prohibited from acting in self-interest | Right to surcharge and recover losses | EPTL 11-1.6; common-law duty of loyalty |
The trustee’s rights, and the duties that limit them
A New York trustee’s powers are broad but never unlimited. They exist only to serve the trust’s purpose and its beneficiaries.
Legal title and management
The trustee holds title and may transact in the property, but EPTL 11-2.3, New York’s Prudent Investor Act, requires the trustee to manage the portfolio as a prudent investor would, considering risk, diversification, and the needs of both income and remainder beneficiaries. A trustee who parks the entire trust in a single speculative stock, or leaves assets uninvested in a non-interest-bearing account, can be surcharged for the resulting loss.
Power to adjust between income and principal
Under EPTL 11-2.3-A, an independent trustee may, in specified circumstances, adjust between income and principal so that income beneficiaries and remainder beneficiaries are treated fairly, particularly when a total-return investment strategy would otherwise shortchange one side. The power is bounded by statutory conditions and cannot be used to favor the trustee.
Discretionary distributions
Where the trust grants discretion (for example, distributions for a beneficiary’s “health, education, maintenance, and support”), the trustee decides. New York courts intervene only if the discretion is exercised in bad faith, arbitrarily, or for an improper purpose.
Power to delegate
A trustee may retain accountants, investment advisors or attorneys, and EPTL 11-2.3(c) permits prudent delegation of investment functions with appropriate oversight. The trustee remains responsible for supervising the delegate.
Compensation
Trustees are entitled to annual commissions calculated under SCPA 2309. That right can be reduced or forfeited where the trustee has committed misconduct.
Every one of these powers is overlaid by the trustee’s fiduciary duties of loyalty and prudence. A trustee cannot exercise a single power in a way that prefers the trustee’s own interest. That is why a trustee never simply “has more rights”: the rights come tethered to enforceable obligations.
The beneficiary’s rights, and how they are enforced
Beneficiaries often assume they are powerless. In New York they are not. The beneficiary’s rights are the mechanism that keeps a trustee honest.
Right to fiduciary loyalty
The trustee must act solely in the beneficiaries’ interest. Self-dealing, whether buying trust property for oneself, lending trust funds to oneself, or taking secret profits, is voidable, and EPTL 11-1.6 makes the misuse of trust property a serious breach.
Right to information
A beneficiary is entitled to know the trust exists, to a copy of the trust instrument, and to be kept reasonably informed about administration. What the right to information actually compels in New York is discussed on our page about beneficiaries’ rights to trust information.
Right to compel an accounting
This is the beneficiary’s most powerful tool. A trustee does not have to account on their own initiative, but under SCPA 2205 an interested person may petition the Surrogate’s Court to compel a trustee to account. The trustee must then file a formal accounting in the statutory form (SCPA 2208) detailing all receipts, disbursements, distributions and commissions. The beneficiary may examine the trustee under oath (SCPA 2211) and file objections (SCPA 2209). A compelled accounting can expose imprudent investments, hidden self-dealing or excessive fees, and is frequently the first step toward a surcharge.
Right to seek removal
Under SCPA 711 and SCPA 719, a beneficiary may petition to suspend or remove a trustee for grounds such as dishonesty, improvident management, mingling trust funds with personal funds, failure to account, or unfitness to serve. SCPA 719 allows summary removal in certain enumerated situations.
Right to distributions
If the trust mandates income or principal payments, the beneficiary can enforce them; if distributions are discretionary, the beneficiary can challenge an abuse of that discretion.
Where the rights collide: New York conflict scenarios
The question of who has more rights is best answered by looking at how disputes actually play out in Surrogate’s Court.
Scenario 1: The beneficiary who cannot get information
A trustee stops responding to a beneficiary’s requests for statements. The beneficiary’s leverage is not to seize the assets. It is to petition under SCPA 2205 to compel an accounting. Once a citation issues, the trustee must produce a complete, sworn accounting or face the court’s compulsion. Here the beneficiary’s procedural right overrides the trustee’s preference for silence.
Scenario 2: The self-dealing trustee
A trustee sells a parcel of trust real estate to himself, or to a company he owns, at a below-market price. Even though the trustee holds legal title and the “power to sell,” the transaction violates the duty of loyalty. A beneficiary can move to set aside the sale, surcharge the trustee for the loss, and seek removal under SCPA 711 and 719. The trustee’s title does not protect a disloyal act.
Scenario 3: The imprudent investment dispute
A trustee leaves a multi-million-dollar trust in cash for years, or concentrates it in one volatile asset. The income or remainder beneficiary can object on Prudent Investor Act grounds (EPTL 11-2.3) in an accounting proceeding and seek a surcharge measured by the difference between actual performance and what a prudent portfolio would have returned.
Scenario 4: Income beneficiary versus remainder beneficiary
Sometimes the conflict is not trustee against beneficiary but beneficiary against beneficiary, with the trustee in the middle. An income beneficiary wants maximum yield; a remainder beneficiary wants growth. The EPTL 11-2.3-A power to adjust exists precisely to let an independent trustee balance these competing interests fairly, and a trustee who tilts toward one class without justification can be challenged by the other.
How the Surrogate’s Court resolves the contest
Trust disputes are filed in the Surrogate’s Court of the county connected to the trust or, for a testamentary trust, the decedent’s estate. A typical path runs: a petition to compel an accounting, issuance of a citation to the trustee, the filing of the account, the service of objections by beneficiaries, discovery, and, if not settled, a trial before the Surrogate. The court can surcharge the trustee, deny or reduce commissions under SCPA 2308 and 2309, set aside improper transactions, and remove the trustee. Timelines vary: an uncontested compelled accounting may resolve in months, while a contested surcharge proceeding can take a year or more depending on discovery and the court’s calendar.
The bottom line
A trustee holds the steering wheel; the beneficiary holds the right to make the trustee drive carefully, and to call in the court when the trustee veers off course. Neither side wins automatically. The outcome depends on the trust instrument, the trustee’s conduct, and which party invokes the right statutory remedy at the right time. Beneficiaries are far from powerless, and trustees are far from unchecked.
Related reading and sources
Related pages: beneficiaries’ rights to trust information, compelling a trust or estate accounting, breach of fiduciary duty, breach of trust, removing a fiduciary in New York, and our New York trust attorney page.
Statutory references: EPTL Article 7 (trusts); EPTL 11-2.3 (Prudent Investor Act); EPTL 11-2.3-A (power to adjust between income and principal); SCPA 711 (suspension, modification or revocation of letters; removal of fiduciary); SCPA 719 (removal without process); SCPA 2205 (compulsory account).
Speak with a New York trust litigation attorney
If you are a trustee defending your administration, or a beneficiary seeking information, an accounting, removal of a fiduciary, or recovery for a breach, we can help. We handle trust and estate disputes in the Surrogate’s Courts of New York City, Brooklyn and Queens. Call 212-233-1233 or email [email protected].
About the Author
Albert Goodwin Esq. is a licensed New York attorney with over 18 years of courtroom experience. His extensive knowledge and experience make him well-qualified to write authoritative articles on a wide range of legal topics. He can be reached at 212-233-1233 or [email protected].
