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January 08, 2019

Helping Trustees Avoid Liability – A Simple Checklist for a Complex World

We live in a complex world and often miss doing simple things that have enormous impact. In A Checklist Manifesto, Dr. Atul Gawande explored how we can remember to do small tasks to avoid huge mistakes—use a checklist. Gawande showed how using checklists in surgery and aviation reduced simple mistakes, such as reminding doctors to wash their hands before surgery and for pilots to make sure they have enough fuel when addressing other problems. The results? The checklists saved lives.

As trust litigators, we see that when a trustee gets into trouble, it is usually for breaching fiduciary duties. Failing to do simple tasks can expose a trustee to significant liability. To help trustees avoid potential pitfalls, we have created a checklist of a trustee’s basic fiduciary duties. Throughout 2019, we will share short articles and smaller checklists that further explain each duty. When things get busy and complex, trustees can use these checklists to pause and ensure they are doing the most important tasks to avoid the most common problems.

A Trustee's Fiduciary Duties

  1. Administer the Trust: Read the trust instrument and follow its terms.
  2. Loyalty: Don’t place own interests above the beneficiaries’.
  3. Impartiality: If two or more beneficiaries, give due regard to everyone’s interests.
  4. Prudent Administration: Administer as a prudent person would.
  5. Control, Protection and Delivery: Control, protect and deliver tangible personal property.
  6. Record Keeping and Identification of Trust Property: Keep adequate records and separate trust property from trustee’s own property.
  7. Enforcement and Defense of Claims: Redress a breach of the trust known to trustee that was committed by former trustee.
  8. Inform and Report: Keep qualified beneficiaries informed of material facts necessary to protect their interests.
  9. Distribution Upon Termination: When the trust terminates, expeditiously distribute the trust property to those entitled to it.

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The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

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