Trustees Liability Additional Information

Whilst a trust can be held liable as an entity it is most likely that trustees will be subject to claims personally for mishandling of financial or legal matters to do with the trust. The obligations of trustees are onerous and potentially expensive.

The fiduciary duties of trustees are wide. They include:

  • acting in person (unless a trustee is a corporate entity)
  • proper management of the trust
  • making appropriate investment decisions
  • keeping proper accounts
  • acting in the best interests of all beneficiaries
  • ensuring tax obligations are met
In the main trustees are exposed to claims from beneficiaries for any loss suffered as a result of their breach of duty.

In some situations they may be indemnified by the trust under the trust deed but their personal assets may also be at risk.

The policy is therefore designed to protect both the trust and the trustees.

As well as providing indemnity for the costs of compensatory damages claims the policy provides for the costs of legally defending any claims. This allows access to professional legal services to protect the interests of all concerned in the claim.

With trustees liability insurance in place the risk exposure of trustees can be isolated. This will avoid a conflict of interest between a trustee in a superannuation fund who must protect the employees' interests and a company officer who is protecting the company's interest.

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