Serving as a Trustee? Protect Yourself from a Breach of Fiduciary Duty

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Protecting Yourself from a Breach of Fiduciary Duty – For Trustees

Are you a trustee wanting to protect yourself from breaching any fiduciary duties? Then you need to understand what your duties are and how you can fulfill them. You may need advice from lawyers and other professionals about your trustee position.

What Are Fiduciary Duties?

Trustees of trusts have important duties to the beneficiaries of the trusts they manage. These fiduciary duties arise because the trustee handles important matters for the beneficiaries, such as investing the trust’s money so that the beneficiaries can receive distributions from the trust.

The main fiduciary duties that trustees have are the duty of care and the duty of loyalty. In essence, trustees must act as a reasonable person would in the management of the trust assets. Also, trustees must remain loyal to the beneficiaries by avoiding conflicts of interest and self-dealing transactions. Trustees who are unfamiliar with the nuances of these duties should consult a lawyer for advice about their obligations under the law.

Fulfilling Your Fiduciary Duties as a Trustee

Meeting your fiduciary duties may be straightforward if the trust you manage is small or needs little maintenance. Larger trusts or trusts where you must take a very active role in management could become more challenging to manage. Many trustees need to enlist the help of professionals to manage trusts.

Professionals bring expertise to the table that not all trustees have. You may be the family member or friend of a trust settlor, and you may not have experience running a complicated trust. With the help and guidance of professionals, you can get assistance in fulfilling your duties. For example, professionals can give you:

  • Real estate management help
  • Accounting and financial management help
  • Assistance with selecting appropriate trust investments
  • Legal advice about your duties and obligations

Examples of Breaches of Fiduciary Duty

New trustees or those inexperienced with more complicated trusts might not be familiar with all the laws surrounding trust management. Your lawyer can advise you on how to follow the laws that apply to the trust you manage. Take the time to familiarize yourself with your duties to the beneficiaries under the specific trust you’re handling. For example, your trust’s terms (as explained in the main document creating the trust) may require you to send regular written accountings to the beneficiaries. Or you may need to send them notices informing them of their withdrawal rights every year. If you do not fulfill these obligations, you could be accused of a breach of fiduciary duty.

Here are some additional examples of breaches of fiduciary duty:

  • Gaining a personal advantage because you invested trust assets in companies your family owns
  • Paying your personal bills from trust funds (except for the fee that the trust language may allow you to collect for your services)
  • Failing to act in the best interests of beneficiaries
  • Deciding to invest trust assets only in very risky investments
  • Not diversifying your investment choices
  • Ignoring beneficiary requests for information about the trust

Unfortunately, a potential breach of fiduciary duty can lead to litigation by the beneficiaries. If you are facing litigation regarding your trustee duties, you need to seek legal advice right away. Breaches of fiduciary duty are taken seriously by courts, and could lead to damages awards or removal of the trustee. Legal advice can help you address any accusations from the beneficiaries. Also, it can assist you with protecting yourself against potential issues in the future.

If you are a trustee with questions about breaches of fiduciary duty or other litigation involving the trust you manage, give Henke & Williams, LLP a call. We work on breach of fiduciary duty cases for clients in the Houston area. Don’t wait to ask for legal help in your position as trustee!

We Can Assist with Breach of Fiduciary Duty Issues

As experienced Houston lawyers, we help our clients find the best solution possible. Our knowledgeable team advises clients about breaches of fiduciary duty and related matters. Legal advice from Henke & Williams, LLP is not “one-size-fits-all” – instead, we tailor it to your unique situation. To schedule a consultation, call 713-940-4500 or use our convenient Contact Form.

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