Mitigating Successor Trustee Liability for Prior Fiduciary Breach: Trust Structure and Administrative Tools

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, October 31, 2017

Recorded event now available

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Program Materials

This CLE webinar will provide estate planning counsel and fiduciary advisers with a thorough and practical guide to protecting successor trustees from liability for breach of fiduciary duty by a preceding trustee or executor. The panel will describe the general rules binding successor trustees and detail various states’ approaches that limit or expand those duties. The panel will discuss structuring and administrative tools to protect successor trustees from claims arising from prior acts.

Description

A challenge for estate planners and advisers in selecting a successor trustee is the liability a successor inherits due to predecessor trustee error. While the law generally holds that a successor trustee is not liable for a predecessor’s breach of duty, states impose varying obligations on successors to discover preexisting breaches and duties to remedy those conditions that the successor trustee “knows or should know” exist.

Estate planners and fiduciaries need to understand how to protect successor trustees from liability if the successor fails to address a breach caused by a prior fiduciary. Trust drafters should be prepared to include exculpatory language and provisions in the trust document outlining the successor trustee’s obligations when taking the fiduciary role.

Additionally, there are administrative remedies, including ordering a trust accounting and having any prior accounting reviewed, that can proactively address a duty to discover errors that could support a breach of duty claim. Successor trustees may also decant a trust if a prior administrator made an actionable error.

Listen as our experienced panel provides a thorough and practical guide to helping estate planners and trust advisers navigate the challenges of avoiding successor trustee liability for preexisting error in trust administration.

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Outline

  1. Identifying successor trustees
  2. Liability exposure of successor trustees for acts or omissions by prior fiduciaries
  3. Restatement approach
  4. State approaches to successor trustee duties
  5. Drafting tools to minimize successor trustee liability
  6. Administrative tools after successor trustee is appointed

Benefits

The panel will review these and other key issues:

  • What actions does the Restatement (Second) of Trusts require of successor trustees to identify possible breach of trust duties by prior fiduciaries?
  • Which states impose stricter requirements on successor trustees than the Restatement approach? Which states have more lenient standards?
  • What provisions can estate planners and trust drafters include in the trust operating agreement to protect successor trustees?
  • What administrative steps are available to minimize successor trustees’ liability exposure?

Faculty

Little, David
David D. Little

Atty
Hartog Baer & Hand

Mr. Little specializes in trust and estate law. He is a Certified Specialist in Estate Planning, Trust, and Probate...  |  Read More

Tachiki, Jeffrey
Jeffrey S. Tachiki

Principal
The Tachiki Law Group

Mr. Tachiki's practice includes estate planning, trust administration, and probate. He is a Certified Specialist in...  |  Read More

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