The passing of a friend of family member can be a life-changing event for many people. But that experience becomes enhanced for the person who is named the trustee for the deceased. Being a trustee means that you are legally responsible for making all of the decisions regarding the estate, and that includes determining how the estate will pay off its debts. If a family member has an issue with the estate or the will, then you are the person that family member goes after. Being a trustee is a thankless but necessary job.
Most people don’t realize this but a trustee is considered legally responsible for the decisions that are made. If those decisions cause financial pain for a family member, then the family member can sue the trustee. That is why a trustee needs to take out liability insurance to protect themselves while administering an estate. There are plenty of things that can go wrong for a trustee, and liability insurance will help to bear the financial burden.
The Statute of Limitations
Being a trustee can be complicated, which makes the job even more stressful. If a trustee breaches their responsibility to the estate, either intentionally or unintentionally, then the estate can sue. Not only would the trustee be on the hook for whatever the financial damages may be for their decisions, but they would also be liable for any profit that was made in the process.
The catch is that being a trustee is not a job that ends when the estate is considered closed. In some states, trustees can be sued for up to five years after the discharge of an estate from probate. That is why long-term liability insurance is a good idea for any trustee to buy and keep in effect for as long as possible.
Fault or No Fault
To the probate court or an disgruntled family member, it does not matter if a trustee made an error by mistake. A good trustee will consult regularly with an attorney to make sure that the right decisions are being made, and a trustee will also bring in other experts to help along the way. If a trustee makes a mistake, whether they meant to or not, they are liable for that mistake.
This is the part of being a trustee that most people simply do not understand. Many people agree to be a trustee out of a feeling of obligation to the deceased or the family. What they do not realize is that they are making themselves liable for every decision they make, and liability insurance is going to help cover the costs of the mistakes that the trustee has to pay for.
Since a trustee is legally responsible for the decisions they make, it stands to reason that a trustee’s personal property could be on the line if they do not have liability insurance. For their own protection, every trustee should have liability insurance to make sure that they do not lose their homes when trying to administer a loved one’s will.
Being a trustee is a serious job, and any mistakes made while being a trustee can have serious implications. If you are named the trustee of a will or an estate, it is in your best interests to get liability insurance and protect yourself from any potential negative consequences of your decisions.