What responsibility does a successor trustee have to correct errors that were made in prior years by the initial trustee?

UPDATED: Sep 30, 2022

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What responsibility does a successor trustee have to correct errors that were made in prior years by the initial trustee?

It appears that certain items were not accounted for properly and were also reported incorrectly on the tax return in the previous year. These errors do impact the past distributions and future administration of the trust. The successor trustee was not aware of these prior to accepting the appointment. Does the successor trustee have responsibility to correct (amend tax returns, K-1s, distribution refunds, etc) or simply administer properly from the point they took over?

Asked on December 30, 2015 under Estate Planning, Colorado


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

A trustee's "fiduciary duty" would require him or her to try to correct material (important) errors made previously that affect the rights (e.g. how much everyone gets) of the beneficiaries. The trustee could hire, and pay for via the trust, necessary expert help to do (such as a CPA), so long as the amount paid therefore is reasonable.

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