Successor Trustee? Tips on Avoiding Potential Liability

To help you avoid personal liability in connection when serving as trustee, follow three rules:

1. Document all transactions, including any reasons for making or not making distributions. While you may perceive the risk of getting sued as low, you cannot ignore the possibility. When you are acting as a trustee and are essentially in control of someone else's assets, you can easily become the focus of any anger or frustration that beneficiaries may feel.



2. Keep beneficiaries well informed of trust business. Be friendly and cooperative. It is much more difficult to sue someone with whom you have a good relationship. Maintain carefully documented files. Seek advice from experts.



3. Consider the dynamics of a lawsuit against a trustee. Judges and juries alike tend to have more sympathy for the party who appears to be “right.” If you have sloppy records (or have none), or if you have not sought help when you came up against something beyond your expertise, or if you have not provided beneficiaries with information that you should have, you will not be given the benefit of the doubt.