What Happens If A Trustee Fails Their Duties In New York?

When someone accepts the role of trustee in New York, they take on a legal and ethical duty to manage assets responsibly and in the best interests of the trust’s beneficiaries. But what happens when things go wrong? Whether it’s a matter of poor communication or outright misconduct, trustee mismanagement is more common than many people realize, and the consequences can be severe. In this article, we break down…

• How beneficiaries can spot red flags in trust management.
• What legal actions are available to hold trustees accountable.
• How proactive planning (with the help of an estate attorney) can prevent conflict before it escalates.

How Can Beneficiaries Identify Trustee Misconduct Or Breach Of Fiduciary Duty In New York?

In New York, beneficiaries have a legal right to request a formal accounting from a trustee. This accounting must detail:

• All trust income and expenses
• Distributions made to beneficiaries
• Investment decisions
• Supporting documents like bank and tax statements, canceled checks, receipts, and rent records

If the trustee refuses to provide this information or if red flags arise, the beneficiary can file a petition with the Surrogate’s Court to begin a judicial accounting proceeding.

This process, known as a petition to settle the trustee’s account, requires the trustee to submit a formal report to the court, which beneficiaries can then review and legally challenge. If misconduct is discovered (for example, inappropriate spending, failure to follow the trust’s terms, or commingling personal funds), the court can:

• Remove or suspend the trustee
• Order restitution
• Appoint a replacement trustee

This proceeding is often the key legal pathway to resolving serious trustee issues.

What Are Common Examples Of Trustee Failure Or Mismanagement In Trusts?

Trustee misconduct can be subtle or blatant. Common examples include:

Ignoring Terms Of The Trust

For instance, failing to distribute income to a beneficiary as required, or not investing assets as directed.

Neglecting The Needs Of Beneficiaries

If the trust is designed to provide housing or basic support and the trustee refuses to act, that may constitute a breach.

Commingling Funds

Mixing personal and trust funds is a major red flag and a clear violation of fiduciary duties.

Failing To Grow The Trust’s Assets

Leaving significant trust funds in non-interest-bearing accounts when the trust calls for prudent investing may be considered mismanagement.

Each case is unique and depends on the specific language of the trust and the trustee’s actions (or inaction) in relation to that document.

At Hyl Conte Law, PLLC, attorneys Arthur Conte and Roseanne Beovich have successfully represented both trustees and beneficiaries in complex estate and trust disputes across New York. With a deep understanding of fiduciary law and Surrogate’s Court procedure, they help families spot early warning signs of trustee misconduct, navigate judicial accountings, and resolve issues before they turn into costly litigation. Their proactive, client-centered approach prioritizes protecting your legacy and preserving family harmony.

If you're worried about trustee performance—or planning to avoid problems altogether—schedule a confidential consultation with Hyl Conte Law today.

Once a judicial accounting is filed, beneficiaries can take formal legal steps, including:

• Filing objections to specific transactions or decisions
• Seeking restitution for misappropriated or mismanaged funds
• Petitioning to remove the trustee and replace them with someone more suitable

In extreme cases, particularly involving theft or fraud, criminal charges may also be pursued. While rare, law enforcement can get involved when there’s evidence that a trustee has deliberately stolen or misused trust funds.

How Can Hiring An Estate Attorney Prevent Trustee Disputes Before They Escalate?

One of the best ways to avoid conflict is to draft a clear, enforceable trust from the beginning with the help of an estate attorney. Experienced attorneys know how to anticipate problems and write language that balances discretion with accountability.

But even if a trust is already in place, an attorney can still play a critical role by:

• Mediating disputes between trustees and beneficiaries
• Negotiating settlements that avoid court action
• Clarifying each party’s legal rights and obligations

In many cases, attorneys help both sides reach an agreement about how the trust should be administered without ever setting foot in court. This not only saves time and money but also helps preserve family relationships.

What Should I Do If I Suspect My Chosen Trustee May Not Follow My Wishes?

If you’re concerned about your appointed trustee or if you’re a beneficiary worried that the trustee won’t honor the original intent of the trust, talk to an attorney as early as possible. Even if the trust gives broad discretion to the trustee, there are still ways to:

• Clarify expectations
• Open constructive communication
• Develop agreements that respect the trust’s original purpose

Sometimes, a conversation and a legal letter are enough to course-correct a trustee’s behavior. Other times, legal intervention is necessary. Either way, early action and informed guidance are your best tools for protecting the integrity of the estate and the interests of its beneficiaries.

Still Have Questions? Ready To Get Started?

For more information on handling trust disputes and trustee misconduct in New York, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (631) 483-7796 today.