Since time immemorial the chancery courtroom has been the secure harbor that fairness has afforded the trustee who is in affordable doubt as to his fiduciary legal rights, duties, and obligations, or who finds himself an innocent bystander in a dispute among beneficiaries that is compromising his capacity to appropriately carry out his fiduciary responsibilities. The duties assumed by a trustee are myriad and onerous. Among them is the affirmative responsibility to carry out the phrases of the believe in. But what if a vital expression is patently or latently ambiguous? A trustee who misdelivers have faith in-accounting profits and/or principal, for illustration, violates that duty and may be held individually, even certainly, liable for the penalties of the violation. What then is the innocent trustee who is fair doubt as to who is entitled to what to do? Get a authorized view, distribute, and hope for the finest? Not a fantastic idea. Remember that even a trustee whose excellent religion reliance on faulty lawful assistance has led him to misdeliver the have faith in assets is not always immune from personal liability for the adverse financial effects of that reliance, a matter that is taken up normally in §8.32 of Loring and Rounds: A Trustee’s Handbook (2022). As amongst the innocent beneficiary and the innocent fiduciary, the latter need to bear the stress of any consequential financial loss.
Fairness vests in the trustee a constellation of fiduciary legal rights to lighten relatively his fiduciary burdens, one of which is the right at rely on expenditure to seeks guidance or a declaratory judgment from the fairness courtroom when there is fair question. It is effectively-founded that a trustee can not be held liable for abiding by a courtroom purchase, no matter how faulty that get might be. (Whether there could be a obligation to attraction the get is a wholly distinctive matter. See §6.2.6 of the Handbook). That “well-established” particular immunization from fiduciary legal responsibility is, in a nutshell, the “safe harbor” equity affords trustees. See Bangert v. Northern Rely on Co., 839 N.E.2d 640, 645-646 (Sick. 2005). The fiduciary responsibility is to have out the correct phrases of the rely on the fiduciary correct is to look for at believe in expenditure the aid of the court docket when there is sensible doubt as to what individuals phrases truly are. When there is realistic doubt, a trustee who fails to work out that proper, again, a right that is exercisable at rely on cost, has only himself to blame for the repercussions.
The constellation of fiduciary rights that equity vests in trustees is taken up normally in
§3.5.2 of Loring and Rounds: A Trustee’s Handbook (2022), which segment and its sub-sections are reproduced in their entirety in the appendix promptly under. The 2022 Edition of the Handbook is readily available for acquire at: https://legislation-store.wolterskluwer.com/s/product or service/loring-rounds-a-trustees-handbook-2022e-misb/01t4R00000OVWE4QAP.