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3 ways to protect yourself when serving as a trustee

On Behalf of | Jun 27, 2022 | Estate Planning

Trusts are often key instruments in people’s estate plans. They may use a trust to pass money onto a child with special needs or a family member with a history of substance abuse. Trusts can help people qualify for Medicaid or reduce their estate tax liability.

If you have accepted the role of trustee, that means you have an obligation to act in the best interests of the beneficiaries of the trust and to follow the instructions provided by the trust’s creator. If other people think that you have violated their rights, embezzled from the trust or made major mistakes, they could initiate legal action against you to remove you from your role or hold you financially accountable.

How can you protect yourself from adversarial court proceedings as a trustee in California?

Familiarize yourself with the documents

If you hope to fulfill someone’s last wishes or protect their property for the benefit of a vulnerable family member, you need to understand what they included in the trust documents.

Carefully reviewing the trust, possibly with your own lawyer and even the input from the lawyer who helped draft the trust, can help you avoid oversights or mistakes of interpretation that could leave you vulnerable to legal action.

Keep thorough records of your actions

From the research you perform when deciding how to invest or maintain specific assets to receipts showing how you distributed trust funds, there are many crucial records you can keep that will reduce your likelihood of facing complaints or challenges later. Keeping copies of everything will protect you if you ever face litigation.

Always put the trust and its beneficiaries first

When you have control over substantial assets, the temptation to use them for personal pain is hard to ignore. Even if you would never dream of misappropriating trust resources for personal gain, you might let your personal relationship with the beneficiaries influence how you treat them and claims for trust assets.

Ensuring that you put the trust and its beneficiaries first whenever making decisions about the trust itself or the asset it contains helps you avoid challenges later that claim you violated your duty by acting in your own selfish interests or let your personal biases affect how you treat the different beneficiaries.

Following the right rules when serving as a trustee will help protect you from probate proceedings that challenge your role or the actions you have taken.