Ambridge's Liquidating Trustees Liability Insurance policy has been developed to address the unique exposures facing liquidating trusts and their trustees. Because liquidating trusts are formed to maximize value and distribute to creditors some or all of the proceeds of divested assets of a formerly distressed and now liquidated entity, trusts and trustees are subject to scrutiny of already disgruntled beneficiaries or other third parties who may disagree with the manner in which the trustee is attempting to liquidate otherwise illiquid assets.

Adding to the concern of trustees is the fact that, by its nature, the trust is designed to liquidate and distribute all of its assets. As a result, while virtually all agreements governing such liquidating trusts contain indemnification and protecting the trustee except in the case of fraud or gross negligence, the trust may ultimately lack the financial wherewithal to support such provisions.

Ambridge also offers a unique tax coverage enhancement to its Liquidating Trustees Liability Insurance policy. A liquidating trust is a tax-efficient vehicle to liquidate assets because income of a qualifying liquidating trust is only taxed as income at the beneficiary level. However, to receive this favorable tax treatment, a trust must qualify as a liquidating trust. Without the benefit of insurance, a challenge to a trust's status could lead to the diminution in value of the trust assets, or worse, if the challenge is made after funds have been distributed, there may not be sufficient trust assets to defend such challenge, or pay any tax, interest or penalties, and the practical recovery of funds from beneficiaries may be difficult. Ambridge's Tax Qualification Insurance extension can protect trusts (and indirectly their beneficiaries) from the financial exposures resulting from a disqualification as a liquidating trust.