Trustees often worry about one thing above all:
“If something goes wrong, am I going to be personally liable?”
The law does expect a lot from trustees, but it also gives you tools to protect yourself when you act carefully and in good faith.
Here are practical steps that lower your risk and help you sleep at night.
1. Keep Trust Money and Personal Money Completely Separate
This is rule number one.
Do:
- Open a bank account in the name of the trust
- Use it for trust income and expenses only
Do not:
- Deposit trust funds into your personal account
- Pay personal bills from a trust account
- “Borrow” trust money, even briefly
Mixing funds (called “commingling”) is one of the fastest ways to create legal trouble and suspicion. Separation is simple, powerful protection.
2. Track Every Dollar
From day one, record:
- Every deposit (amount, date, source)
- Every payment (amount, date, payee, purpose)
- Any fees you pay to professionals
You don’t need fancy software. A spreadsheet or simple ledger is fine if:
- It’s accurate
- It’s complete
- You keep supporting documents (statements, invoices, receipts)
If you’re ever challenged, clean accounting is your best friend.
3. Document Key Decisions and Why You Made Them
For major decisions (like selling property, making distributions, or choosing professionals), note:
- What options you considered
- What the trust document said
- What advice you received (legal, tax, financial)
- Why you chose the path you did
Even a few sentences in a notebook or file can make a huge difference later:
“On [date], decided to sell [asset] after review of [trust section], discussion with [attorney/CPA], and based on [reasons].”
You’re building a paper trail that shows you acted reasonably.
4. Use Professionals When It Makes Sense
You are not expected to:
- Know every tax rule
- Appraise property yourself
- Draft all legal documents without help
It’s often part of your duty to hire:
- An attorney (for legal guidance and required notices)
- A CPA or tax preparer (for returns and tax questions)
- Appraisers (for real estate or unique assets)
- Financial professionals (where appropriate)
The cost of good advice is usually far less than the cost of trying to fix a serious error later.
5. Pay Attention to Your Gut
If you feel:
- Pressured by a beneficiary to move faster than feels safe
- Confused about what the trust actually allows
- Pulled into family drama that puts you in the middle
…that’s your cue to pause and get advice, not just push through.
Your discomfort is often your brain’s way of saying, “Something here needs a second look.”
6. Know the Common “Danger Zones”
Trustees can get into trouble when they:
- Favor one beneficiary over others without legal support
- Make distributions that the trust doesn’t allow
- Fail to diversify investments or invest prudently
- Refuse to provide required information or accountings
- Hide mistakes instead of addressing them
You don’t have to be error‑free, but you do need to be:
- Honest
- Reasonable
- Willing to correct course when necessary
7. Ask for Legal Help Before There’s a Fire
It’s wise to get legal help when:
- You’re not sure how to interpret part of the trust
- Beneficiaries are threatening litigation
- There are complex assets or tax questions
- You’re thinking about resigning or making a major, irreversible move
Early legal advice:
- Reduces the chance of costly mistakes
- Protects you if decisions are later questioned
- Gives you a clear strategy instead of guesswork
Protecting Yourself = Protecting the Trust
When you:
- Keep money separate
- Track everything
- Communicate clearly
- Document decisions
- Ask for help when needed
…you’re doing exactly what a careful trustee is supposed to do.
That protects:
- The beneficiaries
- The person who trusted you enough to name you trustee
- And you.
