Being named an Estate Trustee in a will may feel like an honour, knowing that the deceased respected and trusted you to sort out their final affairs. Unfortunately, in many cases this role turns into a thankless task with the exposure to litigation and personal liability.
An Estate Trustee has obligations not only to the estate, but also holds a fiduciary duty to all of the beneficiaries of the estate. A fiduciary duty is an extremely high standard of “utmost good faith”. The result is that a disgruntled beneficiary who feels that they have been short changed can sue the Estate Trustee directly to seek compensation.
Estate trustees may be required to defend the estate when faced with litigation and they may also be required to defend themselves.
Estate trustees can be sued for an accounting of the estate, that is, to provide details of how the funds in the estate has been disbursed. Where mistakes have been made, they can be held personally responsible to reimburse the estate for the funds paid out.
Estate Trustees can also be held liable for how they manage the money and assets held by the estate. They must exercise the same degree of diligence that a prudent person would in conduct their own affairs, and not to prefer their own interests over the interests of the beneficiaries.
At ZTGH, we defend Estate Trustees who are challenged by beneficiaries, co-trustees, or other parties.
When an Estate Trustee needs a lawyer to defend against the claims made against them, in many cases, the estate itself may be able responsible to pay for the Estate Trustee’s defence.