Top risks trustees face
Most trustee disputes trace back to a small set of failure modes: poor recordkeeping, opaque communication, self-dealing, missed tax filings, and discretionary distributions that look unfair to one branch of the family.
The defense is process: keep contemporaneous records, send annual accountings, document the reasoning behind every distribution decision, and engage professionals before — not after — making a hard call.
- Maintain a trustee binder: trust document, EIN, account statements, decisions, receipts.
- Send annual or semi-annual accountings to qualified beneficiaries.
- Get written distribution requests; document the analysis.
- Avoid commingling — trust funds never touch personal accounts.