Trustee's Errors & Omissions Coverage
Trustees must adminisiter the trust solely in the interests of the beneficiaries, to the exclusion of his own, or others', interests. Trustees can be sued for any alleged negligent act in the management or disbursement of trust assets.
Trustees should protect themselves by purchasing Trustee's Errors & Omissions (E&O) coverage which protects against allegations that the trustee did not act with all of the skill, care and diligence of a prudent person in a similar entity.
Their expsoures include: Conflict of interest; Violation of trust or corporate purpose; Mismanagement or non-management of trust assest; Exceeding the authority granted by the trust; intentional wrongful conduct; third parties that the trustee recommends, selects or retains improperly performs, or fails to perform, professional services as required; suits brought by beneficiaries seeking to challenge the terms of the trust.
Tusetees have the duty to:
- Be fair when dealing in transactions with each beneficiary;
- to participate in the trust administration and insure that co-trustees participate;
- to act promptly to take possession of trust assets and property when appointed;
- to defend the trust against attack and to enforce claims;
- to protect and preserve trust property;
- to keep trust property separate;
- and to provide an accounting of the trust to beneficiaries.
Trustees frequently retain the services of other professionals (e.g., attorney, CPA, investment advisor) to assist in the valuation and administration of the trust. Trustees are vicariously liable for the actions of such other professionals and have a duty to select professionals who are competent and qualified.
Related Terms:
Bankruptcy Turstees E&O
Estate Trustees E&O
Charitable Trusts
Public Trusts
Private Trusts
