When one is named the trustee for a trust, there is a lot of responsibility that comes with that title. Trust administration is not necessarily a walk in the park. A wrong move or a bad decision can come back to bite the trustee in more ways than one. Those in Michigan who are named trustees can take steps to protect themselves should any issues arise when administering a trust.
The job of a trustee is to manage a trust and administer it according to the documented terms. While this seems simple enough, mistakes can be easily made and beneficiaries may not always be happy with how things are done. Unfortunately, if there are concerns that a trustee is not up to the task, of if he or she has made bad decisions or distributed assets erroneously, beneficiaries may have the right to take legal action.
If a trustee is sued by the beneficiaries of a trust, his or her personal assets may be on the line; after all, compensation would have to come from somewhere if it is ultimately awarded. There are a few things that a trustee can do to help avoid litigation or fight his or her case if civil actions are filed. The first is to keep records of everything regarding the trust, such as distributions and changes. The second is to consider an errors and omissions insurance policy. If legal actions are taken, any compensation would come from insurance and not one's personal assets.
Finally, one of the best things a trustee can do is get help from an experienced attorney. If one is not careful or does not fully understand his or her role during trust administration, a lot can go wrong. With assistance, Michigan residents who are named as trustees can fulfill their roles appropriately and complete trust administration without error.
Source: dummies.com, "What Are a Trustee's Fiduciary Duties?", Accessed on May 3, 2017