Role of a Trustee When You Die: NY

What is the Role of a Trustee When You Die? A NY Expert Explains

Being named a “Successor Trustee” in a loved one’s estate plan feels like an honor. It is a sign of profound trust. But as an expert New York attorney with many years of experience, I can tell you what it *really* is: a demanding, high-stakes legal job with significant personal liability. It is not a reward; it is a massive responsibility.

I am Russel Morgan, and my firm, Morgan Legal Group, has guided over 1,000 families through the complex probate and trust administration process. The most common question we get is, “What does a trustee *actually* do?” Most people confuse the role of a Trustee with that of an Executor. They are not the same. One deals with a private contract; the other deals with a public court.

If you have been named a trustee, or if you are creating a trust and choosing one, this 2025 guide is for you. We will explain your duties under New York law, the dangers you face, and the process you must follow. As our 900+ positive online reviews show, our goal is to demystify this process and give you the clarity to proceed with confidence.

The Most Common Confusion: Trustee vs. Executor in New York

Before we can define your role, we must clear up this critical distinction. 90% of the problems we see in our 1,000+ cases stem from confusing these two jobs, even if they are held by the same person.

The Executor: The “Probate” Manager

An Executor is the person named in a Last Will and Testament.

• Their job is to manage the “probate estate”—assets that were in the deceased’s name *alone*.
• Their authority comes from the New York Surrogate’s Court.
• Their job begins *only after* a judge appoints them and grants “Letters Testamentary.”
• The entire process is public, court-supervised, and often takes 1-2 years in New York City.

The Trustee: The “Trust” Manager

A Trustee (or “Successor Trustee”) is the person named in a Trust document (like a Revocable Living Trust).

• Their job is to manage the “trust estate”—assets that were titled in the name of the trust.
• Their authority comes *immediately* from the trust document itself.
• Their job is 100% private. There is no court, no judge, and no public filings.

A Revocable Trust is the “gold standard” of estate planning *precisely* because it avoids the public, costly, and slow probate process. Your role as Successor Trustee is the engine that makes this private transfer of wealth possible. You are the private alternative to the Surrogate’s Court.

What is a Successor Trustee? Your Role Begins Now

While the person who created the trust (the “Grantor”) was alive, they were almost certainly their *own* trustee. They managed their own assets as they always had. The moment they pass away, the “Successor Trustee” named in the document—you—are legally “promoted.”

Your job is to step into the Grantor’s shoes, take control of the trust’s assets, and carry out the private instructions written in the trust document. You are not just a helper; you are the new legal manager of the entire trust estate.

The Fiduciary Duty: A Higher Standard of Care Under NY Law

This is the most critical concept you must understand. As a trustee, you are a “fiduciary.” This is the highest standard of care recognized under New York law. It means you must *always* act in the absolute best interest of the beneficiaries, putting their needs entirely before your own.

This duty is broken down into several parts:

• The Duty of Loyalty: You cannot “self-deal.” You cannot sell the trust’s Brooklyn brownstone to yourself for a discount. You cannot borrow money from the trust.
• The Duty of Prudence: You must manage the trust’s assets responsibly. You must follow New York’s “Prudent Investor Act,” which requires you to invest and manage assets as a “prudent” person would.
• The Duty of Impartiality: You cannot favor one beneficiary over another (unless the trust explicitly tells you to). You cannot give money to your sister (Beneficiary A) while telling your brother (Beneficiary B) to wait.
• The Duty to Account: You have a legal duty to keep perfect records and inform beneficiaries about the trust’s status.

The Big Warning: You Have Personal Liability

In our many years of experience, this is what shocks trustees the most. If you breach this fiduciary duty—even by accident—the beneficiaries can sue you. And if you are found liable, you may have to repay the trust from your personal assets. If you distribute assets too early and the estate owes a tax, *you* could be personally liable for that tax. This is why you must take this job seriously and why hiring an expert estate planning attorney is your #1 protection.

Your Step-by-Step Guide: The Trust Administration Process in NY

As a new trustee, you are likely overwhelmed. Where do you even begin? As a firm that has handled this over 1,000 times, we can provide the checklist. This is the exact process we guide our clients through.

Step 1: Locate the Trust Document and Get Death Certificates

Your first step is to find the original, signed trust document. This is your instruction manual. You cannot do anything without it. Read it, and then read it again. You must also order 10-20 certified copies of the death certificate. You will need one for every financial institution.

Step 2: Consult an Expert NY Trust Attorney

This is not a “DIY” project. Your first call should be to an experienced trust administration lawyer. Here is the good news:

• You are not expected to be a lawyer, but you are liable for legal mistakes.
• The cost of hiring an attorney to guide you is a legitimate expense of the trust. You do not pay for this from your own pocket.

As a fiduciary, hiring an expert is the *prudent* thing to do. It protects you from liability and ensures the process is done correctly. Our firm can be retained by the trust to handle all of this for you.

Step 3: Identify and Notify All Beneficiaries

The trust document will list all the beneficiaries. Under New York law, you have a duty to notify them that the Grantor has passed and that you are now the trustee. This is a delicate but crucial step. Clear, professional communication (which we can handle for you) is the #1 way to prevent family conflict.

Step 4: Get a Tax ID Number (EIN) and Open a Trust Bank Account

The moment the Grantor died, their Social Security Number “died” with them. The trust is now a separate legal and taxable entity. You must go to the IRS website and apply for an Employer Identification Number (EIN) for the trust. Once you have this EIN, you will go to a bank and open a *new* checking account titled, “The [Name of Trust], [Your Name], Trustee.” All trust expenses will be paid from this account.

Step 5: Marshall (Collect) and Value All Trust Assets

This is the heavy lifting. You must find every asset that was titled in the name of the trust. This includes:

• Bank & Brokerage Accounts: You will present the death certificate and a “Certificate of Trust” (which your lawyer drafts) to take legal control.
• Real Estate: You must get a formal “date-of-death” appraisal for all real estate (like a Long Island home). This is *essential* for tax purposes (see “Step-Up in Basis” below).
• Co-ops (NY-Specific): Transferring a co-op is not a simple deed change. It requires a complex legal process with the co-op board. Our firm has extensive experience with this.
• Personal Property: You must inventory valuable art, jewelry, etc.

Step 6: Pay All Legitimate Debts and Final Expenses

The trust is responsible for the deceased’s final debts. This includes final medical bills, credit cards, and funeral expenses. You must perform “due diligence” to find creditors. You, as trustee, must pay these bills *before* you pay any beneficiaries.

Step 7: File and Pay All Taxes (The 2025/2026 Problem)

This is the #1 trap for inexperienced trustees. You are personally responsible for filing these.

1. Final Form 1040: The deceased’s final personal income tax return.
2. Form 1041 (Fiduciary Tax Return): The trust is a taxpayer. If it earns income (interest, dividends, rent) after death, it must file its *own* tax return.
3. Form 706 (Federal Estate Tax Return): This is the 2025/2026 crisis. As of 2025, the exemption is $13.61M. On Jan 1, 2026, it drops to ~$7M. You *must* determine if the estate is taxable under the new, lower limit.
4. NYS Estate Tax Return: New York has its own $6.94M “cliff” tax.

This is not a job for TurboTax. This requires a trust-savvy CPA and an attorney. Making a mistake here can make you personally liable to the IRS.

Step 8: Prepare a Final Accounting & Get Releases

Before you distribute a single dollar, you must prepare a Final Accounting—a detailed spreadsheet of every asset, every dollar in, and every dollar out. You provide this to all beneficiaries. In exchange for their inheritance, they sign a “Receipt and Release” form, which legally releases you from all future liability. This is your most important protection.

Step 9: Distribute the Assets and Terminate the Trust

After all debts are paid, taxes are filed, and releases are signed, you can finally follow the trust’s instructions.

• If the trust says “distribute outright,” you write the checks and terminate the trust.
• If the trust says “hold in trust for my children until they are 30,” your job is *not* over. You are now the long-term manager of that trust, and your fiduciary duties (like investing prudently) continue.

The Dangers: Top 3 Mistakes a New Trustee Can Make

From our 1,000+ cases, we see the same tragic, avoidable errors.

1. Mistake 1: Co-mingling Funds. You pay for the funeral from your personal checking account. You use the trust debit card for your own gas. This is a *massive* breach of your duty and can lead to lawsuits. All expenses must go through the new trust bank account.
2. Mistake 2: Distributing Assets Too Early. You give your sister her $50,000 inheritance. Six months later, you discover a $100,000 tax bill. The trust is empty. *You* are now personally liable to the IRS for that $50,000.
3. Mistake 3: Ignoring the “Prudent Investor Act.” You leave $500,000 in a 0% checking account for three years. The beneficiaries can sue you for the lost growth. You had a duty to invest that money prudently.

Can a Trustee Be Paid in New York?

Yes. Being a trustee is a difficult, high-liability job. It is not an “honor.” New York law (EPTL) and the trust document will almost always state that you are entitled to a “reasonable” commission. This is typically calculated in a similar way to an Executor’s commission (a percentage of the assets managed and distributed). This fee is paid by the trust, not by you.

Do I Need to Hire a Lawyer to Be a Trustee?

You are not legally *required* to, but you would be foolish not to. You are 100% *personally liable* if you make a mistake. The trust *pays* for the lawyer. There is no reason to put your own family’s finances at risk to save the trust a few dollars. Hiring an expert is the *prudent* and *correct* action for a fiduciary to take.

Conclusion: You Are Not Alone in This Process

Being named a successor trustee means you were the most trusted person in someone’s life. Now, it is your duty to honor that trust by executing their wishes professionally and legally. You do not have to do it alone.

At Morgan Legal Group, we specialize in “Trust Administration.” We handle every step I’ve outlined, from getting the EIN to preparing the final accounting and protecting you from liability. Our 900+ positive reviews (as seen on Google) are from clients we have guided through this exact process. Schedule a consultation today. Let our experience be your protection.

For more information on New York’s specific trust laws, you can review the official New York Estates, Powers & Trusts Law (EPTL).

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