Faegre Drinker Biddle & Reath LLP, a Delaware limited liability partnership | This website contains attorney advertising.
August 13, 2019

Helping Trustees Avoid Liability – The Duty of Enforcement and Defense of Claims

When there is a potential legal claim involving a trust, the trustee must act. A trustee has the duty to evaluate affirmative claims of the trust and to pursue those claims when enforcement would benefit the trust. A trustee must also defend claims against the trust. To navigate their legal requirements, trustees should:

  • Consult with an attorney immediately upon becoming aware of a potential or asserted claim.
  • Assess whether a potential claim could result in the recovery of, or increase the value of, the trust assets, and analyze the costs and benefits of pursuing the claim.
  • Defend the assets of the trust against lawsuits by beneficiaries and third parties.
  • When accepting the position of successor trustee, be aware of:
    • Possible breaches of the trust by the former trustee.
    • Whether there is language in the trust agreement eliminating a successor trustee’s duty to evaluate its predecessor’s conduct and pursue potential claims.
    • Whether the beneficiaries have already released the predecessor trustee.

A trustee is entitled to pay attorneys’ fees incurred to pursue or defend against claims involving the trust that are reasonable and in good faith from trust assets. When in doubt on any of these issues, a trustee should seek legal advice. It is always better to be safe than sorry.

To receive future checklists on fiduciary duties, subscribe to our updates on General Wealth Management Topics.

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.

The Faegre Drinker Biddle & Reath LLP website uses cookies to make your browsing experience as useful as possible. In order to have the full site experience, keep cookies enabled on your web browser. By browsing our site with cookies enabled, you are agreeing to their use. Review Faegre Drinker Biddle & Reath LLP's cookies information for more details.