Can I free myself from liability as the trustee of a trust when I distribute the assets?

As the trustee of a trust, you are rightfully concerned about your own liability while conducting the trust administration. If anything goes wrong or if a beneficiary is unhappy, they may look to you as the responsible party. On the other hand, the beneficiaries also want to receive their share of the trust assets as quickly as possible. Trustees can protect themselves from some liability if they require indemnification from the beneficiaries before making distributions of trust assets.

Seeking Indemnity From the Beneficiaries of a Trust

If you have decided that the time is right to make distributions of the trust assets and are concerned about your liability, consider taking the following steps:

  1. Consult with an experienced attorney who can help you prepare a valid and effective receipt and release form that contains indemnification language.
  2. Ask that the beneficiaries sign the form in exchange for receipt of their share of the trust assets.
  3. If the beneficiaries refuse to sign the form, consider involving the probate court procedures before making a distribution. These procedures are more time consuming and costly, but will protect you from liability.
  4. Indemnification language can protect you from unknown liabilities that arise after the distribution of assets.
  5. The language in the form may state that each beneficiary is responsible for any such liabilities.
  6. Their liability, however, is limited to the amount of distributions they received from the trust.

If you decide to request indemnification from the beneficiaries when you distribute trust assets, it is important to seek guidance from a knowledgeable attorney. We are here to help. To learn more about how we have helped many other clients implement estate plans, we encourage you to view our client testimonials page today.

James F. Roberts
Founder and owner of the Law Office of James F. Roberts and Associates, a premiere estate planning law firm