A Trustee of a Trust has very specific responsibilities. In addition to making sure the trust is administered for the benefit of the trust beneficiaries, there are specific laws regarding how the trustee should manage trust property. Because the role is so important and often involves large sums of money, the consequences of breaching trustee responsibilities are quite grave.
- Trustee Responsibilities
- Duty of Confidentiality
- Duty of Loyalty
- Duty to Notify Beneficiaries
- Duty to Protect Trust Property
- Duty to File Tax Returns
- Duty to Prudently Invest Trust Funds
Trustee responsibilities include the:
Consequences of Breach
If a trustee fails to faithfully perform his or her duties, he or she may be subject to a variety of sanctions. The beneficiaries can bring a lawsuit against the Trustee that could result in removal as trustee, monetary damages, denial of Trustee compensation, and even the reversal transactions that the Trustee may have entered into improperly. In extreme cases, if the Trustee’s breach of his fiduciary duties resulted in a loss or substantial risk of loss to the beneficiaries, a Trustee may be subject to criminal liability.
Sometimes a Trustee may be dutifully fulfilling his or her responsibilities, but makes a mistake or is faced with difficult beneficiaries. In this event, to protect him or herself from monetary fines, a trustee can obtain errors and omissions insurance or even a bond to guarantee his fidelity to the Trust.
Consultation with Attorney
It is wise for a Trustee to consult with an attorney about his or her duties. We recently worked with a Trustee who had not done so and had made major errors in distributions and transactions. That Trustee had to pay back several thousand dollars to the Trust and luckily could. If you are a beneficiary and aren’t getting reports or you suspect the Trustee is not acting properly, you should immediately consult an attorney to reduce the risk of losses to the Trust.
The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.