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Articles by Judith Pearson
Does a Successor Trustee Need Liability Insurance? | JD Supra
If you’ve been appointed as a successor trustee, you likely have some questions about your duties, responsibilities, and any financial risks you might face. This article breaks down the role of the successor trustee, including when liability begins and steps you can take to minimize risk. What Is a Successor Trustee? A successor trustee is the individual named in a trust document to step in as trustee in the event of the original trustee’s death, incapacitation, or resignation.
Trustee Liability in the Murdoch Succession Saga | JD Supra
September 4, 2024 To embed, copy and paste the code into your website or blog: "Over the years, the Murdoch family dynamics have been covered in the press, and some have said the HBO series Succession was loosely based on the Murdoch media empire." Recently, much has been written about Rupert Murdoch’s petition to amend his Nevada irrevocable trust to grant his eldest son, Lachlan, voting control over News Corp and Fox Corporation.
Frequently Asked Questions About Trustee Liability Insurance | JD Supra
Managing the assets left in a trust is a major responsibility: It’s your job to properly manage and administer trust assets to the letter—or potentially face costly legal consequences. In the instance of a lawsuit, trustee liability insurance provides financial protection. If you’re not sure if you need trustee liability insurance or are unsure about how it works, these answers to frequently asked questions are here to help.
The Impact of Current Trends on Investment Firm Risk Management | JD Supra
The Growth of the Investment Advisory Industry Outside of the four major wirehouses (Morgan Stanley, Merrill Lynch, Wells Fargo, and UBS), the investment advisory industry is a fractured market driven by three sectors: Smaller, independent registered investment advisors (RIAs) Breakaway RIAs that leave the wirehouses to set up their own shops Mega organizations with private equity to fund acquisitions According to Cerulli Associates, 93% of RIAs manage less than $1 billion in assets under...
Cybersecurity for Trustees: How to Reduce Risk and Respond to an Incident | JD Supra
We often remind our clients about the importance of taking cybersecurity measures. In response, we frequently hear the question, “How can I suffer a cyber loss if I don’t have custody of the funds?” Imagine this scenario: A bad actor scrutinizes email activity, identifies recurring distribution requests, and watches for busy times in the day or month. Right at the height of activity, the bad actor notes the request for a recurring distribution and acts.
Family Enterprise Risk Management
https://www.wealthmanagement.com/sites/wealthmanagement.com/files/logos/WealthManagement_com_white.png Skip navigation Recent Recent Featured Ultra-high-net-worth (UHNW) individuals, private businesses and family offices don’t always appreciate the significance of risk management. Risk management for family offices and other family businesses involves the process of identifying, assessing and controlling threats to a family’s capital and assets.
What Is Private Placement Life Insurance? | JD Supra
Market volatility and heightened tax uncertainty have caused increased interest in private placement life insurance (PPLI) in recent years. However, those same factors have led to increased scrutiny for high-net-worth families. In this blog, we’ll examine what PPLI covers, how it differs from private placement variable annuities (PPVAs), and what trustees should consider when being appointed to manage a PPLI.
Trustees and Real Estate: What You Should Know | JD Supra
The property insurance market has been getting more challenging in recent years. According to the 2023 Policygenius Home Insurance Pricing Report, US insurers paid out $99 billion in claims related to natural disasters in 2022. As a result, premiums rose by an average of 21% from May 2022 to May 2023, dwarfing the 12% increase during the previous year. Rates increased by an average of 35% in Florida, the most of any state.
What Is a Purpose Trust? | JD Supra
In the past, many jurisdictions deemed purpose trusts without identifiable beneficiaries as invalid because there was no one to enforce the terms of the trust. This action was due to the “beneficiary principle,” which required a trust to have ascertainable beneficiaries. However, many jurisdictions have now changed their laws to allow for certain types of purpose trusts, especially for charitable purposes. State laws vary regarding purpose trusts.
Exploring the Unique Insurance Needs of Embedded Family Offices | JD Supra
A family office provides a range of services tailored to meet the individual needs of high-net-worth families. Let’s examine the differences between a stand-alone family office and an embedded family office. Stand-Alone Family Office: An organization that manages the wealth and personal affairs of a high-net-worth family or multiple families.
What You Don’t Know Can Hurt You: Why You Need Trustee Liability Insurance | JD Supra
A client recently told me about a conversation he’d had with an institutional co-trustee. The co-trustee was pushing back on the approval of a trustee liability policy. The institutional co-trustee’s reasoning was that most of their co-trustees don’t purchase the coverage. That conversation got me thinking. Is the reason many trustees don’t purchase liability insurance that they don’t know it’s available? Or do trustees think the institution will protect them in the event of a claim?
What to Do When a Trustee Relationship Goes Wrong | JD Supra
The Scenario The first generation of the family (Gen 1) founded a successful real estate company, and they had a son and a daughter (Gen 2) who inherited the business when their parents passed away. The daughter went on to have two children, a son and a daughter (Gen 3), but she later perished in an accident, leaving them orphaned. The second-generation son had three children and, after losing his sister, he became the trustee of his niece and nephew’s assets.
Insurance for a Private Trust Company: 4 Common Policies | JD Supra
If I own or manage a private trust company (PTC), what insurance do I need? This is a great question and, as in many situations, the answer is that it depends. It depends on whether a public trust company is involved, whether the trust company is regulated or unregulated (also called supervised), and the state where the trust company was organized. This article will focus on private regulated and unregulated trust companies.
Do Personal Lines Policies Insure Trustees?
What sort of insurance should trustees have, and how should they think about this subject? What solutions exist, and what sort of mistakes should trustees avoid? The author of this informative article, a senior figure in the insurance sector, sets out the terrain. Judith Pearson (pictured) is family office and trustee liability resource group leader, at Woodruff Sawyer, the US insurance brokerage and consulting firm.
Cyber Liability for Trustees: Preventing and Managing Breaches | JD Supra
Small businesses that don’t think they’re being targeted should take note—cyberattacks can happen to anyone, even those with a one-person operation. A Troubling Trend The challenge with cybercrime today is that we never know all our vulnerabilities—but cybercriminals sit and watch for that one moment of opportunity. With over 2,328 attacks per day, an average of 800,000 occur in a year, according to Astra, a cybersecurity company. In fact, on average, there is a hacker attack every 39 seconds.
Why Are Private Trust Companies Becoming More Popular? | JD Supra
While many states allow for the formation of PTCs, certain states have more favorable trust laws, taxation rates, and business-friendly environments. Some of the more popular states are Delaware, South Dakota, Wyoming, Nevada, and Alaska. What Is a Private Trust Company? The PTC can be formed either as a regulated or unregulated entity.
What Should Trustees Know About the Corporate Transparency Act (CTA)? | JD Supra
What Is the Corporate Transparency Act (CTA)? The CTA is a new law issued in September 2022 and adopted on January 1, 2023. new rules create a central registry of beneficial ownership of legal entities, including LLCs, and establish reporting responsibilities to those who have beneficial ownership. These new requirements are meant to align the US reporting rules with other reporting countries’ transparency guidelines related to the beneficial ownership of legal entities.
Does a Personal Umbrella Policy Cover a Trustee? | JD Supra
Unfortunately, some confusion exists regarding the definition of coverage terms—especially involving personal umbrella policies—that could put you at risk. The goal of this article is to clear up that confusion. Is a Trustee Liability Insurance Policy Necessary? A client recently asked me if the premium for a separate trustee liability insurance policy was warranted, given a broker told them they could purchase a $1,200 extension under their excess umbrella policy.
Does a Personal Umbrella Policy Cover a Trustee?
If you have been asked to serve as a trustee, you no doubt have questions about the duties and responsibilities of the role. You also should be clear on your trustee insurance coverage. Unfortunately, some confusion exists regarding the definition of coverage terms—especially involving personal umbrella policies—that could put you at risk. The goal of this article is to clear up that confusion. Is a Trustee Liability Insurance Policy Necessary?
Market Volatility Puts Trustees in the Hot Seat | JD Supra
ESG and Cryptocurrency: How Should Trustees Respond? Trustees have the responsibility of using their powers in the best interests of current and future beneficiaries. However, competing viewpoints on hot topics and market instability affecting investments may make the right decisions unclear.
Declining Mental Capacity and How It Affects Estate Plans | JD Supra
Alzheimer’s disease and related dementias (ADRD) are one of the leading causes of morbidity and disability among older adults. Studies show that an estimated 35 million people live with ADRD worldwide, and it is expected that this number will increase to 115 million by 2050. ADRD is a chronic brain condition that is terminal and marked by declining memory, language, executive functions, and other cognitive abilities that impact an individual’s ability to manage daily living.
Boards Buy D&O Insurance—Shouldn’t Trustees Also be Protected? | JD Supra
Without D&O insurance, the company would be reimbursing the directors and officers from its balance sheet. The reimbursement obligation comes from the corporate by-laws. It is payable to the directors and officers of a company, or to the organization itself, as indemnification (reimbursement) for losses or advancement of defense costs in the event the insured suffers such a loss. Companies purchase D&O insurance to attract excellent board members.
What Prevails, Business Judgment Rule or Donor Intent? | JD Supra
Paul Newman created the foundation to give away all royalty rights from the sale of Newman’s Own products, focusing on supporting children and their families. According to the foundation, it has given away more than $570 million since 1982. In the lawsuit, his daughters allege that the foundation had disregarded their late father’s wishes, including his desire for them to direct their own funds for donation.
BUGGED Selecting a Trustee: Individual versus Corporate versus Independent | JD Supra
Duty of obedience to adhere to the trust terms Duty of prudence and reasonableness in making administrative and investment decisions Duty of objectivity in not giving preference to any beneficiary over another equally suited beneficiary Duty of transparency to provide trust information and accountings as stated in the trust agreement. As you can see, it is a significant responsibility and one that comes with potential liability.
Selecting a Trustee: Individual versus Corporate versus Independent | JD Supra
While making the decision to set up a trust may be a no-brainer, selecting your trustee requires some careful consideration. The trustee is the individual or corporate entity that manages your trust and distributes your assets to the trust beneficiaries. As a fiduciary, the trustee must follow the instructions outlined in the trust document, managing, and distributing the trust assets in the best interests of the beneficiaries.
Is a Special Needs Trust Right for You? | JD Supra
An estate planning strategy to carefully consider is a special needs trust. This article offers an overview of a special needs trust and the pros and cons of setting one up. What Is a Special Needs Trust? A special needs trust provides for a disabled, chronically ill, or injured beneficiary who relies on government assistance. The trust’s primary purpose is to preserve eligibility for Medicaid and Supplemental Security Income (SSI) benefits while providing funds from the trust.
Your Estate Plan Advisors Want You to Choose a Trustee—Now What? | JD Supra
Estate planning involves deciding how your assets will be maintained and distributed after your death or in the event you become incapacitated. In addition to your financial wealth, your assets can include your homes, properties, vehicles, artwork, pensions, art collections, and life insurance policies.
Betwixt and Between: How Trustees Can Navigate a Volatile Market | JD Supra
With the S&P 2022 year-to-date returns down roughly 12%, the Dow down about 9%, and bonds down 12%, investors have some difficult choices to make. Conventional wisdom suggests that investors stay the course with a long-term investment outlook that removes emotion from investing decisions. However, staying the course is one thing when someone is investing their own money. It can be quite another thing for a trustee who has a fiduciary duty of care to manage assets on behalf of beneficiaries.
What to Consider When Choosing a Trustee | JD Supra
In what some are calling “The Great Wealth Transfer,” experts predict that boomers will give about $68 trillion to their heirs over the next 20 years. And this intergenerational transfer of wealth is not stopping there. Almost $200 billion was raised through SPACs from 2019 to 2021. While the actual statistics of how much money went directly to millennials from the SPAC and IPO boom is unknown, it’s safe to say that it’s a remarkable amount of additional wealth transferring to the next generation.
Understanding and Protecting Trusts in An Evolving Regulatory Landscape | JD Supra
In December 2021, the Biden Administration announced an anti-corruption plan made in conjunction with more than 100 other countries. While the reported purpose of this announcement is to counter fraud, regulations tend to expand to principled clients.
Do Personal Lines Policies Insure Trustees? | JD Supra
If a friend or family member has asked you to be the trustee of their estate, you probably have many questions. One of your concerns may involve your insurance coverage. We often hear the following from our clients: “I was just appointed as a trustee; does my personal lines policy cover me?” This article will examine professional liability insurance and the protection it offers the trustee.
What New Family Trustees Need to Know | JD Supra
Understanding the role and responsibilities of a trustee is an essential part of accepting this job. Yet those involved in the creation or drafting of wealth transfer vehicles are reluctant to discuss the roles and responsibilities and liabilities of the trustee. This article examines the key information a trustee should know when deciding whether or not to take on this responsibility. What are the goals and objectives of the trust?
Behind Enemy Lines: Women in Combat During World War II
The historical roles of women in combat during the Second World War have always interested me. When I started my research into the women who served their countries for my upcoming novel, The Paris Apartment, I was introduced early to the biographies and memoirs of women in combat on the Eastern European front, where the war had come to the cities and towns with unspeakable savagery and a shocking number of casualties for both civilians and soldiers.
Limiting Life Insurance Trustee Liability in Times of Coronavirus
artisteer/iStock/Getty Images Plus How fiduciaries can protect themselves. Judith L. Pearson, Michael Brohawn | Mar 25, 2020 Trustees of life insurance have a fiduciary duty to beneficiaries to review life insurance policies periodically. In times of significant financial market volatility, it becomes even more critical to gauge market impact on the policies under their care. If assumptions no longer make economic sense, they may be personally liable for claims of negligence.
A Woman of No Importance
Publisher's Summary A NEW YORK TIMES BEST SELLER Chosen as a BEST BOOK OF THE YEAR by NPR, the New York Public Library, Amazon, the Seattle Times, the Washington Independent Review of Books, PopSugar, the Minneapolis Star Tribune, BookBrowse, the Spectator, and the Times of London Shortlisted for the Plutarch Award for Best Biography “Excellent....
Trustees and Cyber Liability
Trustees face unique cybersecurity challenges due to the sensitive information that’s shared among a wide array of advisors, trustees and beneficiaries. Trustees and beneficiaries alike may be targeted by cyber criminals desiring access to sensitive financial, strategic or operational data. Many consider the management of cyber risks to be a responsibility of the trustee because the trust is the primary vehicle used to hold assets that are passed from one generation to the next.
Protecting the Trustee’s Nest Egg
Knowledgeable trustees understand their roles, responsibilities and potential for personal liability and realize it can be a thankless job. The trustee who doesn't understand her roles and responsibilities and doesn't appreciate the diligence that comes with the job is at risk to make mistakes.
Mitigating Fiduciary Risks
What follows 20 years of unprecedented wealth creation? Many more years of unprecedented wealth transfer. A massive transfer of wealth has begun. Market intelligence firm Wealth-X forecasts that $16 trillion of wealth is expected to change hands over the next 30 years. The upcoming transfer includes more than $2.1 trillion by 460 billionaires, according to the UBS/PwC Billionaires Report 2016.
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