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Alexandria, VA Estate Planning Blog

Wednesday, July 2, 2014

Trustee Liability for Breach of Trust

Personal Trustee Liability: Trust Reliance
A Trustee who acts in reasonable reliance on the terms of the Trust as expressed in the Trust instrument is not liable to a beneficiary for a breach of Trust to the extent the breach resulted from the reliance.

However, a term of a Trust relieving a trustee of liability for breach of Trust is unenforceable to the extent that it:

1. Relieves the Trustee of liability for breach of Trust committed in bad faith or with reckless indifference to the purposes of the Trust or the interests of the beneficiaries; or
2. Was inserted as the result of an abuse by the Trustee of a fiduciary or confidential relationship to the settlor.

Note: An exculpatory term drafted or caused to be drafted by the Trustee is invalid as an abuse of a fiduciary or confidential relationship unless the Trustee proves that the existence and contents of the exculpatory term were adequately communicated to the settlor.

Personal Trustee Liability: Beneficiary Consent or Ratification
Also, a trustee is not liable to a beneficiary for breach of trust if the beneficiary consented to the conduct constituting the breach, released the trustee from liability for the breach, or ratified the transaction constituting the breach, unless:

The consent, release, or ratification of the beneficiary was induced by improper conduct of the trustee; or
At the time of the consent, release, or ratification, the beneficiary did not know of the beneficiary's rights or of the material facts relating to the breach.

Personal Trustee Liability: Contract
Except as otherwise provided in the contract, a trustee is not personally liable on a contract properly entered into in the trustee's fiduciary capacity in the course of administering the trust if the trustee in the contract disclosed the fiduciary capacity.

A trustee is personally liable for torts committed in the course of administering a trust, or for obligations arising from ownership or control of trust property, including liability for violation of environmental law, only if the trustee is personally at fault.

A claim based on a contract entered into by a trustee in the trustee's fiduciary capacity, on an obligation arising from ownership or control of trust property, or on a tort committed in the course of administering a trust, may be asserted in a judicial proceeding against the trustee in the trustee's fiduciary capacity, whether or not the trustee is personally liable for the claim.

If you have any questions about Trustee liability or breach of Trust, please contact us.



The Lenzi Law Firm, PLLC assists clients throughout Northern Virginia and Washington D.C. including Fort Washington, Falls Church, Ft. Myer, Vienna, Rosslyn, Springfield, Mount Vernon, Annandale, Fort Belvoir, Fairfax, Dunn Loring, Merrifield, McLean, Oakton, Reston, Burke, Great Falls, Fredericksburg, Stafford and Herndon in Arlington County, Alexandria County, & Fairfax County.



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