Q. I am in the process of lining up trustees for our Land Trusts and I was asked the question, "what is the liability?"
I searched through Lou's materials and the
state law and could only really determine that there wouldn't be unless they breached fiduciary duty. Is this true, or are there other liabilities they should be concerned about? For instance, if anything involving our Trust went to court, what would be the Trustee's involvement/liability?
A. Generally speaking the Trustee has no liability.
Sections 7, 8 and 9 of the Trust Agreement covers most if not all of the situations that may create potential liabilty and states that the beneficiary, not the trustee will be liable.
If for some reason a court case occurs, the Trustee may need to be involved. The Trust Agreement states that the Trustee should not divulge any information related to the trust. The Trustee can also resign (section 13) or be terminated (section 14) at any time. You will also have a successor trustee and possibly a director that could be used if needed.