When Mike accepted the role of executor for his uncle's estate, he thought it meant showing up to the reading of the will and signing some papers. He didn't know it meant something more significant: a legal obligation to every beneficiary that could expose him to personal liability if he got it wrong.

Three months into the administration, Mike had loaned himself $40,000 from estate funds to cover some personal bills. He figured he'd pay it back before anyone noticed. He was wrong. A beneficiary demanded an accounting. The loan was discovered. Mike was surcharged — meaning the court required him to pay back the $40,000 plus interest out of his own pocket. He also lost his executor's commission.

Mike's situation was a breach of fiduciary duty. He didn't understand what that meant before he accepted the role. He understood it well by the time the proceeding was over.

Fiduciary duty is the legal standard that governs executors, trustees, guardians, and others who manage assets or make decisions on behalf of others. In New York, this duty is enforceable, taken seriously by the courts, and carries real personal consequences when violated.

What Is a Fiduciary?

A fiduciary is a person entrusted to act in another person's best interest. The term comes from the Latin "fiducia" — trust. A fiduciary holds a position of trust and confidence, and the law imposes special obligations on them because of that relationship.

In New York estate law, three roles carry fiduciary responsibilities:

Each role carries its own specific obligations, but they share a common legal foundation: the fiduciary must always act in the best interest of the people they serve — not in their own interest.

The Duties of an Executor in New York

An executor (named in a will) or administrator (appointed when there's no will) serves as the personal representative of a deceased person's estate. Their duties begin when Letters Testamentary or Letters of Administration are issued by Surrogate's Court and continue until the estate is fully settled.

The executor's core fiduciary duties include:

Duty to Locate and Inventory Assets

The executor must identify and take possession of all estate assets — bank accounts, real estate, investments, business interests, personal property, and any other property belonging to the decedent. New York requires a formal inventory of probate assets. Missing assets, failing to locate accounts, or neglecting to collect what's owed to the estate can be a breach.

Duty to Pay Valid Debts and Taxes

The executor must pay the decedent's valid debts in the correct priority order established by SCPA Section 1811. Funeral expenses come first, then administration expenses, then taxes, then other debts. Paying a non-priority creditor ahead of a priority creditor — or paying a creditor without verifying the debt is valid — can create personal liability.

Duty to Distribute to Beneficiaries

After paying debts and taxes, the executor distributes the remaining estate to the beneficiaries named in the will (or the intestate heirs if there's no will). Distribution must follow the will's terms exactly. An executor who distributes incorrectly — even through honest mistake — can be personally liable for the shortfall.

Duty to Account

The executor must file a formal accounting with Surrogate's Court showing every asset received, every payment made, and every distribution to beneficiaries. Beneficiaries have the right to review and object to the accounting. An executor who refuses to account, files inaccurate accounts, or delays accounting beyond a reasonable time is breaching their duty.

Duty of Loyalty — No Self-Dealing

The executor cannot purchase estate property for themselves at below-market prices, lend themselves estate funds, pay themselves excessive compensation, or make any transaction that benefits themselves at the expense of the estate. This is the duty Mike violated. Self-dealing is the most common executor breach and the one courts take most seriously.

Executor Compensation in New York

New York executors are entitled to a statutory commission under SCPA Section 2307. The rate is approximately 5% on the first $100,000 of estate value, 4% on the next $200,000, 3% on the next $700,000, 2.5% on the next $4 million, and 2% on the remainder. For a $1 million estate, the executor commission is approximately $34,000.

An executor who takes more than this statutory amount — or who takes anything beyond the statutory commission without court approval — has engaged in self-dealing.

For more detail on the executor's role and responsibilities, see our full guide to executor duties and responsibilities in New York.

The Duties of a Trustee in New York

Trustees have broader and longer-lasting responsibilities than executors. An estate administration typically concludes within a year or two. A trust may continue for decades. A trustee's fiduciary duty persists for the entire life of the trust.

The Prudent Investor Standard

New York's Estates, Powers and Trusts Law Section 11-2.3 imposes the "prudent investor" standard on trustees. A trustee must invest trust assets as a prudent investor would — diversifying the portfolio, considering risk and return in light of the trust's purpose and the beneficiaries' needs, and monitoring investments regularly.

A trustee who keeps all trust assets in a single stock, fails to invest idle cash, makes speculative investments, or neglects to monitor the portfolio violates the prudent investor standard. They can be surcharged for investment losses caused by that violation.

Two critical points:

First: The standard applies to the portfolio as a whole, not to individual investments in isolation. A single risky investment may be appropriate if it's balanced by safer holdings. Courts don't second-guess individual decisions made in good faith; they look at the overall investment strategy.

Second: Lay trustees (family members, friends) are held to the same legal standard as professional trustees. "I don't know anything about investing" is not a defense. If you accept the role, you're expected to get help if you need it — hiring an investment advisor, for example.

Duty of Impartiality

Many trusts have both current beneficiaries (who receive income) and remainder beneficiaries (who receive the principal eventually). The trustee owes a duty of impartiality to both groups — they can't favor one at the expense of the other.

A trustee who invests entirely in high-yield bonds (maximizing income for the current beneficiary) at the expense of growth (harming the remainder beneficiaries) may be breaching the duty of impartiality. Conversely, a trustee who invests entirely for growth (favoring the remainder beneficiaries) while a current beneficiary needs income distributions is also potentially breaching this duty.

Duty to Inform and Account

Under New York's EPTL and common law, trustees must keep beneficiaries reasonably informed about the trust's administration. Beneficiaries of an irrevocable trust have the right to request a formal accounting — and the trustee must provide one. Failing to respond to reasonable requests for information, keeping poor records, or refusing to account is a breach.

The Self-Dealing Prohibition for Trustees

Trustees face strict self-dealing rules. A trustee cannot:

These rules apply even if the transaction would be fair to the trust. The rule is prophylactic — it prevents conflicts of interest rather than just policing their effects.

The Duties of a Guardian in New York

Guardians appointed under Article 81 of New York's Mental Hygiene Law (for incapacitated adults) and those appointed by Surrogate's Court (for minors) hold fiduciary responsibilities over both personal and financial decisions.

Guardian of the Person

A guardian of the person makes decisions about where the incapacitated person lives, their medical care, and their daily life. The fiduciary duty here is to act in the ward's best interests — taking their expressed wishes and prior values into account, even when the ward can't communicate them clearly.

A guardian who moves a ward to a less desirable facility for their own convenience, denies the ward visitors who matter to them, or makes medical decisions based on cost rather than patient welfare may be breaching their fiduciary duty.

Guardian of the Property

A guardian of the property manages the ward's financial assets — paying bills, managing investments, filing tax returns, and preserving assets for the ward's benefit. This role carries the same prudent investor and self-dealing prohibitions as trusteeship.

Article 81 guardians must file annual reports with the court showing every transaction they've made. The court reviews these reports. Any unexplained transactions, excessive fees, or evidence of self-dealing triggers an inquiry.

For more on the guardianship process in New York, see our guide to guardianship for aging parents in New York.

Breach of Fiduciary Duty: What It Means and What Happens

What Constitutes a Breach

A breach of fiduciary duty occurs when the fiduciary fails to meet the standard of care required by their role. Common breaches include:

The Surcharge Remedy

When a court finds that a fiduciary has breached their duty and caused loss, the primary remedy is a "surcharge" — a court order requiring the fiduciary to personally compensate the estate or trust for the loss their breach caused.

A surcharge is personal. The fiduciary pays out of their own pocket. It's not covered by the estate's assets. If a trustee's negligent investment lost $300,000 that a prudent investor would not have lost, the trustee is surcharged $300,000 — plus interest, plus the beneficiaries' legal fees in bringing the proceeding.

Removal

New York's Surrogate's Court Procedure Act Section 711 authorizes Surrogate's Court to remove an executor for a range of reasons, including dishonesty, failure to perform duties, conflict of interest, and incapacity. A removed executor loses their commission and may be surcharged for any losses caused during their administration.

Trustee removal follows similar principles under EPTL and common law. Guardians can be removed by the Supreme Court that appointed them under Article 81.

Criminal Liability

The most egregious breaches — outright theft, intentional misappropriation, systematic fraud — can constitute criminal conduct. A fiduciary who steals from an estate or trust can be prosecuted for larceny under New York Penal Law. The fact that you're the executor doesn't give you immunity from criminal charges for taking money that isn't yours.

How Beneficiaries Can Protect Themselves

If you're a beneficiary of an estate or trust and you suspect the fiduciary is not meeting their obligations, here's what you can do:

  1. Request an accounting. Beneficiaries of both estates and trusts have the right to demand a formal accounting. Send the request in writing. If the fiduciary refuses or delays, that refusal is itself evidence of a problem.
  2. Consult an attorney. Before confronting the fiduciary or making accusations, get legal advice. An attorney can evaluate what you know, advise on what additional information to request, and assess whether the facts support a breach claim.
  3. File a proceeding in Surrogate's Court. Beneficiaries can file objections to an accounting, petition for a compulsory accounting, or file a petition for removal of an executor or trustee. These proceedings give the court authority to investigate and act.
  4. Move quickly. New York has statutes of limitations for breach of fiduciary duty claims. Waiting too long can bar your claims entirely. If you suspect a breach, don't wait to see if it gets better.

For Fiduciaries: If you've been named as an executor, trustee, or guardian — and you're not sure what you're getting into — get legal advice before you accept. The role is an honor, but it's also a legal obligation. Understanding what's expected of you before you start is far better than learning after you've made a costly mistake.

Choosing the Right Fiduciary: What to Look For

When you're choosing who to name as executor or trustee in your estate plan, you're making a decision that will affect your beneficiaries long after you're gone. The criteria that matter:

Trustworthiness and Integrity

Non-negotiable. The person you name will have access to significant assets with limited oversight. If you have any doubts about their integrity, don't name them. A person who misuses a small amount of money now will likely misuse estate assets later.

Financial Competence

Can they manage money? Keep records? File tax returns? Understand investment basics? Not everyone is equipped for this, even among people you trust completely. If your first choice lacks these skills, consider whether a professional co-fiduciary makes sense.

Availability and Willingness

Being an executor or trustee takes real time — particularly during the first year of administration, and on an ongoing basis for trustees. A person who is already overwhelmed, who lives abroad, or who you haven't spoken to in years is a poor choice regardless of their other qualifications.

Conflict-Free

A fiduciary who is also a major beneficiary faces inherent conflicts of interest. That's not always disqualifying — in smaller, simpler estates, family members who are also beneficiaries serve as executors all the time without problems. But in larger or more complex situations, or where family relationships are strained, an independent trustee eliminates the conflict entirely.

For resources on trustee selection and other estate planning topics, visit morganlegalny.com/estate-planning/.

Fiduciary concerns? Call Morgan Legal Group at (212) 561-4299. Whether you're a beneficiary worried about an executor's conduct or a fiduciary who wants to make sure you're meeting your obligations, we can help. Visit us at 15 Maiden Ln #905, New York, NY 10038.