Provisions protecting Trustees

Question 1

Contracts

Answer 1

A trustee who property enters a contract while administering a trust not personally liable, so long as the contract discloses fiduciary capacity

Question 2

Torts

Answer 2

A trustee is not personally liable for torts committed in the course of administration, or for obligations arising from ownership of trust property

Question 3

Investment in partnerships

Answer 3

A trustee holding an interest in a partnership is not personally liable to third parties on partnership contracts if the fiduciary capacity was disclosed in the contract

Question 4

Unenforceable exculpatory clauses

Answer 4

An exculpatory clause excusing the trustee from breach of trust is unenforceable to the extent that

1) it provides immunity for breaches committed in bad faith or reckless indifference; or

2) was inserted as a result of trustee abuse of fiduciary or confidential relationship to the settlor

an exculpatory clause is presumed to result of such abuse unless the trustee proves that the existence of and contents of the clause were adequately communicated the the settlor