Can a New York trustee delegate? Agents, advisers and the duty of care

Delegating investment and management functions

EPTL 11-2.3(c) provides that a trustee may delegate investment and management functions, exercising care, skill and caution in selecting a suitable delegee, in establishing the scope and terms of the delegation consistent with the purposes of the instrument, in periodically reviewing the delegee's exercise of the function, and in controlling the overall cost of the delegation.

The delegee owes the trustee and the trust a duty to comply with the scope and terms of the delegation and to exercise the function with reasonable care, skill and caution, and an attempted exoneration of the delegee from liability for failing to meet that duty is void (EPTL 11-2.3(c)). Delegating does not remove the trustee's own duty to select and to monitor.

Custodians and the costs of administration

EPTL 11-1.1(b)(9) allows a fiduciary to employ a qualifying bank or trust company as custodian of the securities held as fiduciary, and EPTL 11-1.1(b)(22) allows the payment of the reasonable and proper expenses of administration from the trust, including the reasonable counsel fees the fiduciary necessarily incurs.

Whether an expense was reasonable and proper is measured when the account is settled, which is one reason trustees keep each engagement letter and invoice with the ledger.

The court's review of attorney fees

SCPA 2110 provides that the Surrogate's Court may, at any time during administration, fix and determine the compensation of an attorney for services to a fiduciary or a person interested, direct its payment from the estate, and order a refund of any amount paid beyond the fair value of the services.

Communications between a trustee and the trustee's own attorney are protected: CPLR 4503(a)(2) provides that where an attorney represents a lifetime trustee in that capacity, a beneficiary is not the client by status alone, and the fiduciary relationship does not by itself waive the privilege.

What stays with the trustee

Agents carry out functions; the trustee keeps the duties. The trustee still keeps the property separate (EPTL 11-1.6), allocates between principal and income impartially (EPTL 11-A-1.3), and answers for the selection and monitoring of every delegee (EPTL 11-2.3(c)). A licensed New York attorney of the trustee's choosing can explain how a particular engagement fits those duties.

The statutes, verbatim

• Attorney

  CPLR 4503 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Fiduciaries' powers

  EPTL 11-1.1 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Prudent investor act

  EPTL 11-2.3 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Compensation of attorneys

  SCPA 2110 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

Common questions

Frequently asked questions

Can a New York trustee hire an investment manager?

Yes. EPTL 11-2.3(c) allows a trustee to delegate investment and management functions with care in selecting the delegee, setting the scope and terms, and reviewing the delegee's actions; an attempted exoneration of the delegee is void.

Can a New York trustee pay a lawyer from the trust?

The reasonable counsel fees a fiduciary necessarily incurs are an expense of administration (EPTL 11-1.1(b)(22)), and the Surrogate's Court may fix an attorney's compensation and order a refund of any excess (SCPA 2110).

Are a New York trustee's talks with their lawyer confidential?

Generally yes. Where an attorney represents a lifetime trustee in that capacity, a beneficiary is not the client by status alone, and the fiduciary relationship does not by itself waive the privilege (CPLR 4503(a)(2)).

General information about New York law, not legal advice.