If you are ever appointed a trustee, you will have a fiduciary duty to act on behalf of the beneficiaries. If you breach that duty, you may find yourself in court.
Being a trustee is not an easy job. Trustees must follow the terms of the trust and are accountable to the beneficiaries for their actions. They may be held personally liable if they:
If you become a trustee, the following principles can help avoid allegations of wrongdoing that could result in personal liability:
The key to successfully administering a trust is generally to avoid worrying about what could happen if you do something wrong and focus on the best interests of the beneficiaries.
Consider all the Facts
Even then, there can be some liability if a trustee winds up unable to pay trust debts with trust assets or fails to take reasonable care to avoid a decision that causes a loss for the trust. Before making decisions, a trustee should take into account all the facts and consider whether to seek advice from lawyers, accountants, investment advisers or other specialists.
After obtaining advice, however, trustees must make decisions on their own and in good faith. They are not permitted to delegate their decision-making power unless authorized by the trust.
Trustees should not commit to any ongoing action that could effectively limit future discretion. If necessary, a trustee can apply to the courts for directions concerning any trust property, the management or administration of trust property or the exercise of any power or discretion. With court approval for a course of action, they can protect themselves from liability