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 someone else. In New York, that role is governed by the Estates, Powers and Trusts Law (EPTL), and a trustee is held to the highest legal standard the law recognizes — a fiduciary standard. In plain terms, the trustee must invest prudently under the prudent-investor rule of EPTL Article 11-A, act with undivided loyalty to the beneficiaries rather than to themselves, and account to those beneficiaries for every dollar that flows in or out of the trust. The exact weight of those duties shifts depending on which kind of trust the trustee is managing — and that is where many families get tripped up. Below, we compare how a trustee’s job changes across the three trusts New Yorkers use most: the revocable living trust, the irrevocable trust, and the supplemental (special) needs trust.

The Core Fiduciary Duties Every NY Trustee Owes

No matter which trust they serve, every New York trustee carries the same three foundational duties. Understanding them is the key to understanding whether your trustee is doing the job correctly.

• Duty of prudent investment. Under EPTL Article 11-A, New York’s Prudent Investor Act, the trustee must manage trust assets with the care, skill, and caution a prudent investor would use — diversifying investments and considering the trust’s purpose, not chasing speculative gains or letting cash sit idle.
• Duty of loyalty. The trustee must act solely in the interest of the beneficiaries. Self-dealing — buying trust property for themselves, favoring one beneficiary out of personal preference, or commingling trust funds with their own — is a breach.
• Duty to account. Beneficiaries have the right to know what the trustee is doing. The trustee must keep accurate records and provide a formal or informal accounting showing income, expenses, distributions, and the value of trust assets.

A trustee who violates these duties can be removed by the Surrogate’s Court and held personally liable for losses. Our trust administration team works with both individual and professional trustees to keep these obligations airtight.

How a Trustee’s Job Differs by Trust Type

Here is where the comparison matters. The label “trustee” is the same, but the day-to-day reality is very different depending on the instrument.

Feature	Revocable Living Trust	Irrevocable Trust	Special Needs Trust (SNT)
Governing law	EPTL Article 7	EPTL Article 7	EPTL 7-1.12
Who usually serves as trustee while grantor is alive	The grantor themselves	An independent trustee	An independent or family trustee
Can the grantor change the terms?	Yes — amend or revoke anytime	Generally no	No
Primary purpose	Avoid probate, privacy, incapacity planning	Estate-tax reduction, asset protection, Medicaid planning	Preserve means-tested benefits
Estate-tax effect	None — assets stay in taxable estate	Removes assets from taxable estate	Varies by structure
Trustee discretion	Low while grantor lives; high after	High and binding	Highly constrained by benefit rules

The Revocable Living Trust Trustee

In a revocable living trust, the grantor typically serves as their own trustee while alive and competent, retaining full control to amend or revoke the trust at will. The fiduciary duties are largely dormant during this period — you cannot meaningfully owe a duty of loyalty to yourself. The trustee role becomes critical at two moments: incapacity and death. A named successor trustee steps in to manage assets if the grantor becomes incapacitated, and after death the successor distributes assets to beneficiaries without probate, keeping the entire process private. The trade-off to understand: this trust avoids probate and offers privacy, but it does not save estate tax — the assets remain inside the grantor’s taxable estate.

The Irrevocable Trust Trustee

The irrevocable trust trustee carries the heaviest, most independent burden. Because the grantor has given up the power to amend or revoke, the trustee’s decisions are binding and largely final. This trust is the tool of choice for estate-tax reduction, asset protection, and Medicaid planning — but Medicaid planning comes with New York’s five-year look-back period, meaning transfers into the trust must generally be made well before benefits are needed. The trustee here must exercise genuine independent judgment, because if the grantor retains too much control, the tax and asset-protection benefits can collapse.

The Special Needs Trust Trustee

The trustee of a special needs trust, authorized under EPTL 7-1.12, has perhaps the most delicate job of all. The entire point of an SNT is to preserve a disabled beneficiary’s eligibility for means-tested benefits like Medicaid and SSI. That means the trustee must make distributions that supplement — never replace — government benefits. A single careless cash distribution can disqualify the beneficiary from the very benefits the trust was built to protect. This trustee must understand benefit rules as fluently as investment rules.

Trust vs. Will: Why the Trustee Even Exists

Families often ask why they need a trustee at all when a will and an executor seem simpler. The difference is fundamental. A will is a public document that must be probated in the Surrogate’s Court before assets can pass — a process that is on the record and open to challenge. A trust avoids probate entirely and stays private, which is precisely why it needs a trustee to administer it outside of court supervision. If you are weighing the two approaches, our trust vs. will comparison breaks down the decision in detail, and our broader trusts overview explains how each tool fits a full estate plan.

This privacy and control matter even more given New York’s estate-tax structure. For 2026, the basic exclusion amount is $7,350,000. But New York imposes a notorious “cliff”: once an estate exceeds 105% of the exclusion — $7,717,500 — the estate loses the entire exemption, not just the excess. For families near that threshold, an irrevocable trust and a skilled trustee are not luxuries; they are the difference between a manageable tax and a punishing one.

What Does a Trustee Get Paid?

New York does not let trustees simply invent their own fees. Trustee commissions are set by statutory schedules under the Surrogate’s Court Procedure Act (SCPA) and the EPTL, which tie compensation to the value of the trust and the income it generates. The precise calculation depends on the trust’s size and structure, so it is worth reviewing your specific schedule with counsel rather than relying on rules of thumb.

Frequently Asked Questions

Can I be my own trustee in New York?
Yes — in a revocable living trust, the grantor commonly serves as their own trustee while alive and competent, naming a successor to take over at incapacity or death. In an irrevocable trust, however, you generally need an independent trustee to preserve the tax and asset-protection benefits.

What happens if a trustee breaches their duties?
A New York trustee who breaches the duty of loyalty, prudence, or accounting can be removed by the Surrogate’s Court and held personally liable to make the trust whole for any resulting losses.

Does a trust trustee have to go to court like an executor?
No. Avoiding court is the central advantage of a trust. Unlike a will, which must be probated publicly in the Surrogate’s Court, a trust is administered privately by the trustee without routine court supervision.

How does the prudent-investor rule affect what a trustee can invest in?
Under EPTL Article 11-A, the trustee must invest as a prudent investor would — diversifying, considering the trust’s purpose and risk tolerance, and avoiding speculation. There is no fixed list of “approved” investments; the standard is one of prudent process.

Speak With a New York Trust Attorney

Choosing the right trustee — and holding that trustee to New York’s fiduciary standards — is one of the most consequential decisions in your estate plan. Whether you are setting up a revocable, irrevocable, or special needs trust, or you are a trustee unsure of your obligations, the team at Morgan Legal Group can guide you. Schedule a consultation with Russel Morgan, Esq. today: https://calendly.com/russel-morgan/30min.