When Nevada residents create a trust, one or more individuals will be appointed to have some fiduciary responsibility. It is important for a person who has been appointed a trustee or who has other fiduciary duties connected with an estate to fully understand those duties and the liabilities associated with them. A fiduciary might want to work with a professional to identify potential issues and risks with the trust.
Trustee agreements can include provisions that limit liability. Beneficiaries and fiduciaries can also work together to ensure that the trustees remain accountable. The creators of the trusts, can also consider insurance to minimize risk.
There are a number of points advisers to fiduciaries should consider. One is whether the trust would be able to fund a defense in a lawsuit against a trustee. Another is whether a beneficiary might be able to sue a trustee for “mental anguish”. This was the case in one lawsuit dealing with oil and gas properties. A third consideration is what will happen if there is a lawsuit and trustees have different levels of financial resources.
As these examples demonstrate, choosing the right people to have fiduciary responsibility during trust planning or estate planning is critical. The people chosen should be trustworthy and organized, and if the trust is a complex one, they may need to have a financial or legal background. There are also additional steps a person can take to reduce the likelihood of lawsuits and challenges. Talking to family members about the estate plan and the rationale behind it can be important. Preparing documentation correctly with the assistance of an attorney and reviewing it regularly to ensure that it is up to date based on current law and any changes to a person’s assets or family is also critical.