Who should take responsibility for trust planning mistakes

Trust planning, while a powerful tool for estate management, isn’t foolproof; mistakes happen, and determining who bears the responsibility can be complex. Often, it’s not a single party, but a combination of factors, and the level of responsibility shifts depending on the nature of the error. While an attorney can provide guidance, ultimately, the grantor (the person creating the trust) must actively participate and understand the implications of their decisions; this is paramount to successful estate planning.

What Happens When a Trust Doesn’t Reflect Your Wishes?

The first layer of responsibility lies with the grantor. They are the ones who define their intentions and provide the information needed to create the trust document. If the trust doesn’t accurately reflect their wishes due to incomplete or inaccurate information provided, the onus is on them. For example, I once worked with a man named Arthur, who delayed providing complete details about a business partnership he had. Months later, his family discovered the business held significant debt, and the trust hadn’t accounted for it. This led to lengthy legal battles and depleted the estate’s assets. Had Arthur been forthcoming initially, the trust could have been structured to protect the family from that liability.

Can the Attorney Be Held Accountable?

An attorney has a duty to provide competent legal advice, draft the trust document accurately, and explain the provisions in a clear and understandable manner. If an error arises from the attorney’s negligence – for example, a clause is missing, improperly worded, or contradicts other provisions – the attorney may be held liable for resulting damages. However, proving legal malpractice can be difficult, and it requires demonstrating that the attorney’s actions fell below the accepted standard of care and directly caused financial harm. It’s important to remember that an attorney cannot anticipate every possible scenario or make decisions *for* the client; they can only advise based on the information provided.

What About Trustees and Their Responsibilities?

Once a trust is established, the trustee takes on a fiduciary duty to manage the assets according to the terms of the trust document and in the best interests of the beneficiaries. Mistakes made in managing the trust assets – such as making imprudent investments, failing to properly account for income and expenses, or engaging in self-dealing – can lead to liability for the trustee. In California, trustees are held to a high standard of care under the California Prudent Investor Act, which requires them to diversify investments and act with reasonable prudence. Trustees must follow the terms of the trust, and failure to do so is a clear breach of duty.

How Can Mistakes Be Avoided & What if Things Go Wrong?

The best way to avoid responsibility for trust planning mistakes is proactive planning and thorough communication. Grantors should: actively participate in the planning process, clearly articulate their wishes, ask questions, review documents carefully, and seek second opinions if needed. Attorneys have a duty to explain the implications of each provision. If a mistake is discovered *after* the trust is established, it may be possible to amend or restate the trust document, but this often requires legal assistance and may have tax implications. For example, a woman named Eleanor came to us after her husband passed away, realizing their trust didn’t address digital assets. We were able to petition the court to appoint a temporary administrator to access and manage his online accounts, preventing the loss of valuable information and assets.

Ultimately, responsibility for trust planning mistakes is often shared. Grantors must be active participants, attorneys must provide competent legal advice, and trustees must act with prudence and loyalty. A well-planned trust, created with clear communication and a thorough understanding of the legal implications, is the best way to protect your assets and ensure your wishes are carried out.

Contact Steven F. Bliss ESQ. at (951) 582-3800 for expert guidance in trust and estate planning.