Trustee Insurance

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Trustee Insurance

Trustees are chosen to protect personal or business assets and act in the best interests of a beneficiary (or beneficiaries). Trustees can be private individuals with some relationship to the beneficiaries, but in many cases, trustees are attorneys who specialize in trusts, probate, or real estate. 

Whether your job is to care for a large trust, oversee a property or other physical assets, sit on the board of a foundation, or manage a family trust, you have major responsibilities. 

As you carry out your duty to protect and serve the interests of the beneficiaries, and sometimes other parties, you must ensure that you, too, are protected if you are sued as a result of your actions as a trustee.

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Why Do I Need Trustee Insurance? 

Trustees often find themselves at the center of ongoing conflicts, especially in family trust situations. You may feel as though you are under constant scrutiny from all sides, despite your best efforts to work in good faith for the beneficiaries. 

Any number of disagreements and complaints can result in you being sued. The only way to protect your personal assets is with trustee insurance. 


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Common Reasons Why Trustees Are Sued

Trustees act as fiduciaries for their beneficiaries. Fiduciary duty means that you have an obligation to act in the best interests of the beneficiary. At the same time, you are likely expected to deal with challenging accounting, financial, and real estate issues. 

Trustees can expect to be heavily scrutinized by the beneficiaries, other family members, and even third parties. Whether you are entrusted with a small family trust or a multi-million dollar estate, you can be sued for a variety of reasons, including the following:

  • Improper accounting (e.g., failure to adhere to generally accepted accounting principles)
  • Mishandling of assets or investment decisions (e.g., selecting unprofitable or unproductive investments)
  • Self-dealing (e.g., the trustee benefits personally from the sale or purchase of trust assets) 
  • Conflict of interest (e.g., an attorney who is acting as a trustee sells trust property to one of his clients)
  • Failure to gain the most favorable tax treatment

Even basic disputes can be extremely costly. In cases of family trusts, lawsuits can carry on for years as family tensions contribute to and are often the cause of disputes.

What Does Trustee Insurance cover? 

Trustee insurance is a form of professional liability insurance, or errors and omissions (E&O) insurance

Because trustees can be held accountable for the decisions they make, trustee insurance protects you and your personal assets when you are sued as a result of your actions as a trustee. 

In general, professional liability insurance provides protection for you if a client sues you for negligence or other wrongdoing related to your work. Professional liability policies provide coverage for: 

  • Actual or alleged errors
  • Omissions 
  • Negligence 
  • Breach of duty 
  • Misleading statements 
  • Claims resulting from the performance—or non-performance—of professional services

Your trustee insurance should cover: 

  • Attorney fees and court costs 
  • Settlements or judgments that you are required to pay

What Types of Trustee Insurance Policies are Available?

The coverage limits of your trustee insurance policy (some can have limits of $10 million or more) must be adequate for the size and structure of the trust. 

Most trustee insurance policies are written on a claims-made or claims-made and reported basis:

  • A claims made policy covers the trustee for claims made when the policy is in force, regardless of when the alleged error happens. This means that if a claim is made for an incident that occurred before the policy was in force, the policy will provide coverage. 
  • A claims made and reported policy stipulates that an E&O claim must be both made against the trustee and reported to the insurer during the policy period in order to be covered.

Every trust situation is highly complex, and you need to evaluate your coverage needs with an insurance agent. Be sure to talk with your agent about coverage for defending against accusations of intentional conduct, fraud, and criminal activity, as well as unintentional misappropriation or misallocation of funds. 

If you’re an attorney, carefully evaluate your attorney malpractice coverage to determine if that policy covers you when you carry out duties as a trustee (if not, you need a standalone trustee insurance policy).

How Much Does Trustee Insurance Cost?

The cost of a trustee professional liability insurance policy depends on:

  • The size of the trust 
  • The trust structure
  • The amount and type of assets in the trust
  • The purpose of the trust 
  • The beneficiary structure 

Your level of experience as a trustee and the depth of your role will shape the coverage you need and how much it will cost.


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Trustee insurance is not something you can buy over the phone or online. It is as complex and important as the trust itself, and you need someone in your corner who can help. 

It’s important to work with an independent agent who can find insurance companies that specialize in covering your trustee professional liability risks, and sell trustee insurance specifically designed for your needs.

An independent agent can help you find the right policy and can help you assess your options. 

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