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Personal Liability of Trustees: Contract & Tort

One of the perks of being a trustee is that the trustee is able to utilize trust assets for expenses to administer the trust. This means, among other things, that a trustee can use trust assets to hire professionals to aid in administration. Similarly, it is quite rare that a trustee is personally  responsible for liability arising out of the administration of the trust. To that end, and to make the job of trustee more attractive, the law has a lot of safeguards in place limiting trustees from personal liability. 

For instance, under Section 456.10-1010, RSMo, a trustee is not personally liable on a contract entered into by the trustee in the course of administration if the trustee discloses the trusteeship/fiduciary capacity. In practice, this is why you will see signature blocks stating that the trustee is signing in his/her trustee capacity; by disclosing this fiduciary status, it will usually trigger Section 456.10-1010 and protect against personal liability for any problems that may arise from the contract (assuming the contract does not state otherwise). 

Interestingly, a trustee is personally liable for torts committed in the course of administering a trust or for obligations arising from ownership or control of trust property — but only if the trustee is personally at fault. See 456.10-1010.2, RSMo. Tort claims, then, (e.g., battery, assault, defamation, tortious interference, fraud, negligence, etc.) can result in personal liability to the trustee. As of this writing, there does not appear to be any cases in Missouri discussing when a trustee is “personally” at fault. Based on committee comments to the Uniform Trust Code, though, liability can arise to a trustee for acts of agents. As a result of Section 456.10-1010.2, RSMo, it appears a trustee is not personally liable for torts committed for acts of agents, but is personally liable when the trustee himself/herself commits the tort. It will be up to future cases in Missouri to explore the parameters of this limitation on liability. 

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