What are the legal liabilities of a trustee?
Trustees are fiduciaries who are legally responsible for managing the assets of a trust for the benefit of the trust’s beneficiaries. As such, trustees have a number of legal liabilities that they must be aware of and take steps to protect themselves from.
The primary legal liability of a trustee is the duty of loyalty. This means that the trustee must always act in the best interests of the trust and its beneficiaries. This includes avoiding conflicts of interest, such as using trust assets for their own benefit or for the benefit of someone else. Trustees must also be diligent in managing the trust’s assets and must not engage in any activities that could be considered a breach of trust.
Trustees also have a duty of care, which means that they must exercise reasonable care and skill when managing the trust’s assets. This includes investing the trust’s assets in a prudent manner and taking steps to protect the trust’s assets from loss or damage.
Trustees also have a duty to keep accurate records and to provide beneficiaries with regular accountings of the trust’s assets and activities. This includes providing beneficiaries with information about the trust’s investments, income, and expenses.
Finally, trustees have a duty to comply with the terms of the trust. This includes following the instructions of the trust’s creator and adhering to any applicable laws or regulations.
Trustees who fail to fulfill their legal duties can be held liable for any losses suffered by the trust or its beneficiaries. This can include financial losses, as well as emotional distress or other damages. In some cases, trustees may also be held personally liable for their actions.
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