Charles E. Rounds Jr., of Suffolk University Law School, has made available for download his article, “The equity court is there for the trustee as well as the beneficiaries”, published in JDSUPRA. The abstract is as follows:
Since time immemorial the chancery court has been the safe harbor that equity has afforded the trustee who is in reasonable doubt as to his fiduciary rights, duties, and obligations, or who finds himself an innocent bystander in a dispute among beneficiaries that is compromising his ability to properly perform his fiduciary duties. The duties assumed by a trustee are myriad and onerous. Among them is the affirmative duty to carry out the terms of the trust. But what if a critical term is patently or latently ambiguous? A trustee who misdelivers trust-accounting income and/or principal, for example, violates that duty and may be held personally, even absolutely, liable for the consequences of the violation. What then is the innocent trustee who is reasonable doubt as to who is entitled to what to do? Get a legal opinion, distribute, and hope for the best? Not a good idea. Recall that even a trustee whose good faith reliance on faulty legal advice has led him to misdeliver the trust property is not necessarily immune from personal liability for the adverse economic consequences of that reliance, a topic that is taken up generally in §8.32 of Loring and Rounds: A Trustee’s Handbook (2022). As between the innocent beneficiary and the innocent fiduciary, the latter should bear the burden of any consequential economic loss.
Click here to view Charles E. Rounds Jr.’s summary of “The equity court is there for the trustee as well as the beneficiaries”
Posted by Marin Larkin, Associate Editor, Wealth Strategies Journal.