This is the third article in a series detailing the duties of a trustee. We have explored the duty of a trustee to comply with the terms of the trust instruments as well as the duties to control trust property and make it productive. This time I will address the duty to enforce claims the trust has against others and to defend actions against the trust. Before taking on the responsibility of acting as a trustee it is crucially important that you fully understand all the legal duties that come with the job.
The duty to enforce claims closely follows the duty to control the trust property. You will only be aware of any claims the trust may have if you are intimately familiar with what the trust contains. There may be unpaid loans that must be collected. If an asset is a business, there may be outstanding accounts. Trust property may be in the possession of third parties, in which case the trustee must compel its return. This duty can become a sticky problem when the claim is against a beneficiary of the trust.
A trustee also has a duty to defend actions taken against the trust. If a creditor makes a claim that you know is fraudulent or invalid you must defend the trust against such spurious claims. If an asset is a home you must make sure there are no invalid liens placed against the property. If a party makes unfounded claims for child support or other debts you must defend the trust against these actions.
Both of these duties may require outside legal, accounting or other relevant advice. If you or a client is a trustee and need support services, contact Lindsay Leonard of Santa Barbara Estate Services.
