Serving as a trustee is a significant responsibility, carrying potential personal liability and financial consequences. The case of Cahill v. Cahill illustrates this point vividly: two siblings, acting as co-trustees of their father’s estate, were found liable for breaching their fiduciary duties. The estate’s trust fund was intended to provide monthly payments to a third sibling. Despite one of the co-trustees—the daughter—not having directly committed any wrongdoing, she was still held personally liable alongside her brother.
The courts made it clear that being a passive participant is not a valid defense for a trustee. The daughter’s decision to take little or no active role in managing or overseeing the trust, as well as her complete reliance on her brother, did not exempt her from liability. Even though her brother misused the funds for his own benefit, she was still found jointly and severally liable due to her failure to exercise the care, diligence, and oversight required of a trustee.
This case serves as an important reminder that being appointed as a trustee is not a role to take lightly. If you wish to honor your loved one’s wishes by serving as a trustee, it is crucial to ensure you are capable of fulfilling your duties. If you do not have the required expertise, consulting professionals with specialized knowledge can help ensure you establish the right safeguards, fulfill your duties properly, and gain peace of mind.
To learn more about trustees’ duties and responsibilities, please refer to our prior blog by Ian M. Hull linked here.