Five Tips For The Successor Trustee To Prevent Lawsuits


At some point after a living trust is created, the trust administration begins. Typically, this happens when the creator of the trust is either incapacitated or passes away. At that time, the successor trustee is appointed and his responsibilities begin. Acting properly during this process can go a long way towards reducing the likelihood that the trust and trustee end up in a lawsuit.

If You Are The Successor Trustee Of A Trust It Is Important To Abide By These Five Helpful Tips

1.  Keep Good Records

To ensure that a trust fulfills its purpose, the trustee must keep accurate, detailed records of income and distributions. The trustee must also be prepared to report these figures regularly to the beneficiaries. If these records are incomplete or inaccurate, the trustee has opened the door for someone to challenge the trust, potentially leading to a costly lawsuit.

2.  Understand the Trustee’s Role

Many trustees wrongly presume their job is to act in the best interests of the person who created the trust. However, in reality, the trustee’s job is to act in the interests of the beneficiaries of the trust.

3.  Know How Compensation is Determined

If the trustee is a close friend or family member, the topic of compensation may have been glossed over or forgotten. The trustee must know how he is going to be compensated. This oversight can result in the trustee’s lack of morale, resentment if managing the trust becomes difficult or time-consuming, or the anger of the beneficiaries.

4.  Remain Objective

Sometimes, the trustee is chosen because he is a close family member or friend. However, disputes about money can happen even in the closest families, and it can be difficult to remain neutral when the trustee is forced to referee these fights. The result could be decisions that beneficiaries perceive to be unfair.

5.  Exercise Common Sense and Seek Advice

The trustee doesn’t need to be a Wall Street whiz to do a good job. But the trustee should be a person who has good judgment and common sense. The trustee should also be comfortable in seeking advice and asking for help, not a know-it-all who thinks they don’t need any assistance. Indeed, one of the best ways for trustees to protect themselves and the trust is to seek qualified tax, legal, and investment advice.

These are just a few tips for trustees to protect themselves and the trust. Of course, there is always the chance that a beneficiary will challenge the trustee’s actions. Although a lawsuit is not always avoidable, following these five tips will help prevent some of the most common trustee pitfalls. 

Brooke Swier Schloss
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Estate Planning & Family Law Attorney