Liability of Trustee to third persons

Question 1

Liability in Contract Common Law, Modern

Answer 1

Common law: if trustee sued in personal capacity, personal assets at stake but can be indemnified by trust if acting within their powers
Modern Law: If other K party knows he’s acting as a rep, he must sue trustee in his rep capacity not personal

Question 2

Liability in tort:

Answer 2

Common law: Trustee sued in personal capacity, if he’s without fault can get indemnified
Modern Law: Only sued in personal capacity if he is personally at fault

Question 3

Modification by settlor

Answer 3

The settlor can modify the trust if the settlor expressly reserves the power to modify the trust.
Settlor also has the power to modify if the settlor has the power to
revoke

Question 4

Modification by the Court

Answer 4

There can be modification by the court regarding charitable trusts and the cy pres power: changing the mechanism to further settlor’s general charitable intent.

Question 5

Modification by Court - Deviation power (doctrine of changed circumstances)

Answer 5

When the court exercises its deviation power, the court
changes the administrative or management provisions of
the trust.
1)unforeseen circumstances on part of settlor
2)necessity to keep trust alive

Question 6

Termination of revocable trust

Answer 6

To retain the power to revoke the settlor must expressly reserve the power in the trust instrument.
Minority: always can revoke unless expressly irrevocable

Question 7

Termination of irrevocable trust

Answer 7

1) ALL PARTIES AGREE including contingent remainderman
2) All beneficiaries agree and purpose has been accomplished. You account for unborn beneficiaries through an assigned guardian
3) By operation of law (trustee just holds title to land but doesn’t use, so it just passes to beneficiary and terminates trust)