Trustees

Tailored industry coverage

 

Why purchase tailored coverage?

Trustees are held to a high fiduciary standard which makes them vulnerable to attack from disgruntled beneficiaries who scrutinize and critique their every move.

Appetite

We protect trustees handling a variety of trusts including:

  • living trusts
  • beneficiary trusts
  • family trusts
  • testamentary trusts
  • liquidating trusts
  • charitable trusts
  • special needs trusts
  • pooled trusts
  • estate guardianship agreements
  • conservatorship agreements

 

Capacity

$10M capacity on primary or excess basis

Coverage & Benefits
  • Professional liability for trustees
  • Policy language tailored to the specific coverage needs of trustees and the exposures therein, including discretionary investment authority, negligent delegation and tax preparation
  • Appointment of defense counsel that specializes in trustee litigation
  • Spousal and domestic partner coverage extensions
  • Coverage for insured trustees that are also trust beneficiaries whereby a suit is brought against another insured trustee
  • Punitive damages up to the full limit of liability (where insurable by law)
  • Final adjudication language for fraud claims
  • Coverage extended to employees of the trustee (paralegal, clerical)
  • 50% retention credit for claims settled in formal mediation
  • Personal injury offenses

Related products

Package Trustees coverage with the following products: General Liability, Cyber, Crime, and Technology.

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Claims scenarios 

Not sure what risks our product covers? We’ve brought some scenarios to life.

Investment decisions

A trustee conservatively purchased securities that held their value while yielding very good dividends, thus producing income for the trust and the trust’s income beneficiaries. The residual beneficiaries (the trustee’s stepdaughters) nonetheless complained. They alleged the trustee had invested for income, benefitting the then-current income beneficiaries, when he should have invested for growth or appreciation, to benefit them. The trustee is now defending a $12 million claim, at his own expense, because the assets of the trust had been fully distributed to the residual beneficiaries before their claims were made.

Investment decisions

A trustee conservatively purchased securities that held their value while yielding very good dividends, thus producing income for the trust and the trust’s income beneficiaries. The residual beneficiaries (the trustee’s stepdaughters) nonetheless complained. They alleged the trustee had invested for income, benefitting the then-current income beneficiaries, when he should have invested for growth or appreciation, to benefit them. The trustee is now defending a $12 million claim, at his own expense, because the assets of the trust had been fully distributed to the residual beneficiaries before their claims were made.

Accounting objections

A trustee managed a trust holding commercial real estate, generating high income and appreciation, even in the current market, but he was sued by a beneficiary asserting a number of objections to the trustee’s account. The beneficiary contended, for example, that the bookkeeping summaries were too hard to understand, and not in accord with Generally Accepted Accounting Principles (GAAP), and hired an expert to support his request for $4 million in damages. Ultimately all of the claims were denied by the court, but not before the trustee incurred $315,000 to defend himself. The beneficiary now asserts the trustee should pay these fees from his own pocket.

Accounting objections

A trustee managed a trust holding commercial real estate, generating high income and appreciation, even in the current market, but he was sued by a beneficiary asserting a number of objections to the trustee’s account. The beneficiary contended, for example, that the bookkeeping summaries were too hard to understand, and not in accord with Generally Accepted Accounting Principles (GAAP), and hired an expert to support his request for $4 million in damages. Ultimately all of the claims were denied by the court, but not before the trustee incurred $315,000 to defend himself. The beneficiary now asserts the trustee should pay these fees from his own pocket.

Negligent delegation

The decedent spent a lifetime building a successful enterprise of interrelated distribution companies, but by the time he died (of suicide), his affairs were in disarray, the value of his business was declining, seemingly due to unavoidable industry changes, and insider theft had run rampant. The trustee moved quickly to contain the damage, restore profitability, and maximize the value of several properties. He has nonetheless been challenged by the decedent’s surviving spouse, who alleges the trustee’s negligence in retaining executives and professionals to run the decedent’s business is the cause of many losses. Regardless of the merits of these accusations, it has proved expensive and difficult for the trustee to defend himself, and he faces millions in potential liability.

Negligent delegation

The decedent spent a lifetime building a successful enterprise of interrelated distribution companies, but by the time he died (of suicide), his affairs were in disarray, the value of his business was declining, seemingly due to unavoidable industry changes, and insider theft had run rampant. The trustee moved quickly to contain the damage, restore profitability, and maximize the value of several properties. He has nonetheless been challenged by the decedent’s surviving spouse, who alleges the trustee’s negligence in retaining executives and professionals to run the decedent’s business is the cause of many losses. Regardless of the merits of these accusations, it has proved expensive and difficult for the trustee to defend himself, and he faces millions in potential liability.

Taxes

Failure to gain the most favorable tax treatment for the trust and the beneficiaries is a frequent source of claims against trustees. The taxation of estates is immensely complicated, even to tax attorneys and accountants, and the rules change seemingly every year. Yet trustees are required to make a number of fairly quick and irreversible decisions and elections within a limited period of time. Many decisions necessarily will be based on speculation as to future occurrences, such as which of the decedent’s assets are most likely to appreciate within an undefined period of time.

Taxes

Failure to gain the most favorable tax treatment for the trust and the beneficiaries is a frequent source of claims against trustees. The taxation of estates is immensely complicated, even to tax attorneys and accountants, and the rules change seemingly every year. Yet trustees are required to make a number of fairly quick and irreversible decisions and elections within a limited period of time. Many decisions necessarily will be based on speculation as to future occurrences, such as which of the decedent’s assets are most likely to appreciate within an undefined period of time.

Co-trustee liability

Having a co-trustee does not always make a trustee’s job easier. Unlike in sole trustee agreements, there is always the chance of disagreement and impasse among co-trustees, who often may be siblings or other close but antagonistic relatives, particularly when they are also beneficiaries of the trust. For example, when a trustee’s discretionary authority prevents the investment of trust funds, his co-trustee may bring allegations against him based upon trust management decisions in which he claims he wasn’t involved, yet had financial ramifications to him - not as a co-trustee, but as a beneficiary entitled to trust distributions.

Co-trustee liability

Having a co-trustee does not always make a trustee’s job easier. Unlike in sole trustee agreements, there is always the chance of disagreement and impasse among co-trustees, who often may be siblings or other close but antagonistic relatives, particularly when they are also beneficiaries of the trust. For example, when a trustee’s discretionary authority prevents the investment of trust funds, his co-trustee may bring allegations against him based upon trust management decisions in which he claims he wasn’t involved, yet had financial ramifications to him - not as a co-trustee, but as a beneficiary entitled to trust distributions.