Published March 2026 • 14 min read

How Trustees Can Avoid Personal Liability

Protect yourself from personal liability with legal strategies, proper insurance, and governance best practices.

Understanding Trustee Liability

Trustees can face personal liability for scheme-related matters if they breach their legal duties or act negligently. Personal liability means trustees may be personally sued and required to pay damages from their own resources, separate from scheme funds.

The good news: trustees can significantly reduce personal liability through proper governance, insurance, and legal protections. This guide explains how.

Sources of Personal Liability

Trustees face personal liability in several areas:

  • Financial mismanagement: Improper use of scheme funds, fraud, embezzlement
  • Breach of duty: Failing to act in residents' interests, conflicts of interest
  • Negligence: Failure to maintain common property, safety hazards
  • Discrimination: Unfair rule enforcement, discriminatory decisions
  • Breach of STSA: Non-compliance with statutory requirements

Insurance Protection

Trustee liability insurance is essential protection. This insurance covers legal costs and damages for claims against trustees.

Assess Your Personal Liability Risk

Take our free 5-minute trustee risk assessment to identify personal liability risks and create a protection plan.