A trustee is personally liable for a breach of his or her fiduciary duties. The trustee’s fiduciary duties include a duty of loyalty, a duty of prudence, and subsidiary duties. The trustee will always have duties, or the trust will become passive and legal title will pass to the beneficiaries.
Are trustees liable for losses?
The trustee will be personally liable to account to the trust for loss that occurs as a result of their breach of trust. This can act fairly harshly against a trustee, and so: No account is taken of loss which would have arisen if the trust had been strictly performed.
What are the liabilities of a trustee?
The trustee is liable, at the option of the beneficiary, to purchase other land of equal value to be settled upon the like trust, or to be charged with the proceeds of the sale with interest.
Who is liable for debt incurred by a trustee?
This means that a trustee is personally liable for any debt incurred when acting as a trustee, regardless of whether the trustee can benefit personally from the trust. There is no special status at law that attaches to acting as a trustee such that personal liability can be avoided.
Who is liable for mistakes made during trust administration?
If you have been appointed as the Trustee of a trust, and you have never served as a Trustee before, you likely have a number of questions relating to your duties and responsibilities. One of the most important of those questions will likely be “Is a Trustee personally liable for mistakes made during trust administration?”
Is the liability of a trust limited to the assets of the trust?
It is a common misconception that an independent trustee’s liability is limited to the assets of the trust regardless of the circumstance in which liability arises. However, this is not the case.
What makes a trustee liable under the Trust Act 1956?
A trustee’s personal liability is tempered, at least in part, by the trustee’s statutory right of indemnity ( Trustee Act 1956, s 38 (2)). By virtue of this right of indemnity a trustee can recoup expenses reasonably incurred in the proper running of the trust. This right of indemnity ranks ahead of any interest a beneficiary has in a trust fund.
