Suing a Trust As you probably know from legal tip 41 a trust is not a legal entity and therefore cannot be sued. This is because a legal person will be acting as trustee and entering contracts. They will do this in their capacity as trustee. So if there are problems it will be the trustee that is sued. An example is Tom is a mortgage broker and operates through a ‘trust structure’. Tom is the trustee of the Tom Mortgage Broking trust. A client sues the ‘business’ which is Tom in this case. Tom is the name that will appear on court documents and Tom is the one that will suffer a court judgment if the case is lost. It is Tom that is personally liable for the money awarded to the other side. However Tom will have incurred this expense in his capacity as trustee and Tom may recover his expenses out of the assets of the trust - which may be nil or minimal. If there are not enough trust assets to cover the debt Tom's personally assets will be at risk. Trustees are personally liable for the debts they incur as trustee for a trust. Next we will cover what happens if a company is sued.