“An accountable Trustee is one that is trustworthy and responsible”

Trust Law recognises that the core duty of trustees is to act in the best interest of the beneficiaries and that the trustees should be accountable to them. However, the liability of the trustees of a trust is often limited or reduced by the wording of the indemnity and exclusion provisions written into the trust deed.

The new Trusts Act 2019 has detailed more specifically where trustees can limit their liability, and where they can’t. This means there are now specific claims that trustees cannot rely on exclusion clauses to save them from.

These liabilities relate to any loss suffered due to a trustee’s:

  • Dishonesty;
  • Wilful misconduct; or
  • Gross negligence.

Due to the changes where the legislation has now clearly spelt out what liabilities can be avoided and which can’t, it is important that trust deeds be revised to update the old-style indemnity clauses. These amendments are needed to make sure that the limited liability granted to trustees only relates to those circumstances where the limitation is actually available. Without updating indemnity clauses in your trust deed it could mean that they are interpreted too narrowly when a trustee comes to rely on them, or they may be completely struck out of the deed in their entirety when a claim is made and a court is reviewing the trustees’ actions.

It is therefore imperative that the indemnity and limitation clause in your trust deed is reviewed and revised to bring it in line with the new rules. Obviously, the team at Prudentia Law is here to assist you with this transition.