Exculpatory Provisions in Trusts

Provisions contained within trust agreements called “Exculpatory Provisions” are those that relieve the trustee from liability for certain acts that could otherwise be considered to be a breach of duty(ies) as a Trustee.  Examples: 1.) the settlor (the person who is creating the trust) can specify that the Trustee is relieved from liability for certain obligations for which it would otherwise be liable under either the Texas Trust Code or by common law; or 2.) can direct or permit the Trustee to do certain things that would otherwise violate a Trustee duty.

Bad Faith, Intent and Reckless Indifference

Section 114.007 (A) of the Texas Property Code (the Texas Trust Code is contained within the Texas Property Code) states that an exculpatory provision which would attempt to relieve a Trustee of liability for breach of trust is unenforceable to the extent it relieves a Trustee from liability for breaches of trust committed in bad faith, intentionally, or with reckless indifference to the interest of a beneficiary.

While the settlor of a trust can provide for a reduction of possible future liability for the Trustee, there are certain acts which the Trustee, regardless of the language in the trust agreement, cannot undertake without incurring legal liability. Accordingly, the rights of the beneficiaries will be protected against Trustees who take actions as Trustees in bad faith, intentionally, or with reckless indifference to the interests of a beneficiary.

Category : Probate Law &Trust Litigation

One Comment → “Exculpatory Provisions in Trusts”

  1. humphries
    8 years ago

    My father’s will includes our deceased mother,ten children and remaindermen. One of the ten deneficiaries had our deceased mother deed all of my father’s land to them. What recourse does the remaining nine beneficiaries have?