Serving as a trustee comes with significant responsibilities. When you’re named in a trust document, it may feel like an honor, but the job can also bring legal risks and obligations that aren’t always obvious. Whether you’re handling a family trust or stepping into the role for the first time, it’s important to recognize the legal challenges that can arise. At Madden Law LLC, our Lisle, IL trust administration lawyers work with trustees, helping them meet their duties and avoid costly mistakes.
Disputes Among Beneficiaries
One of the most common issues we see involves disagreements between beneficiaries. Emotions often run high when money, property, or sentimental assets are involved. A trustee is expected to remain neutral, follow the terms of the trust, and make decisions in the best interests of all beneficiaries. When conflicts arise, beneficiaries may accuse the trustee of favoritism or mismanagement. Without proper guidance, these disputes can quickly escalate into legal action.
Mismanagement Of Trust Assets
Managing trust assets involves more than simply distributing money. Trustees must act prudently, which often includes investing trust property and keeping detailed records of all transactions. If investments underperform or records are missing, trustees may face accusations of breaching their fiduciary duties. Even unintentional errors can lead to personal liability. We help clients put procedures in place to manage trust funds properly and document their actions.
Failure To Follow The Trust Terms
Every trust has specific instructions that must be followed to the letter. Deviating from those terms, even with good intentions, can result in legal claims. For example, making early distributions, delaying mandatory ones, or interpreting vague clauses without legal input can all create problems. Courts take these duties seriously, and a trustee who doesn’t comply may be removed or ordered to pay damages.
Tax And Reporting Obligations
Trustees are also responsible for handling tax filings and providing information to beneficiaries. This includes annual trust accountings and sometimes even ongoing updates. Missing deadlines or filing incorrect returns can result in penalties for the trust or the trustee personally. We often help clients coordinate with accountants and tax professionals to keep filings on track and avoid penalties.
Personal Liability Risks
Acting as a trustee opens the door to personal liability. Unlike business roles where people are shielded by a corporate structure, trustees are exposed to legal action if beneficiaries believe they acted improperly. Even if a trustee is ultimately cleared, defending against a lawsuit can be expensive and time-consuming. Having our lawyers review your actions and offer legal advice can significantly reduce this risk.
Let Our Experience Help You
Before forming Madden Law LLC in 2025, our lawyers spent more than 20 years representing corporations and high net worth individuals at national and regional law firms. We launched this firm to bring that experience to our local community, offering practical and cost-effective legal services. We now focus on helping individuals and businesses manage legal obligations confidently and efficiently.
If you’re serving as a trustee or have been asked to take on the role, we’re here to help you make informed decisions. Contact Madden Law LLC to schedule a consultation and learn how we can support you in meeting your responsibilities and avoiding unnecessary legal problems.