Exculpatory Trustee Clauses

Being a trustee is a difficult job. The trustee owes a litany of fiduciary duties to the beneficiaries, but the beneficiaries do not have any similar duties to the trustee. It is a one way street. The job is made all the more difficult depending on the terms of a particular trust instrument. To make the job of trustee easier and more desirable, trust instruments often include several provisions alleviating liability, including, without limitation, waiving accounting requirements, waiving potential conflicts of interests and waiving liability for decisions made in good faith. 
As of this writing, there are not many cases specifically addressing these types of clauses. However, Section 456.10-1008, RSMo, does specifically address exculpation provisions: 
“A term of a trust relieving a trustee of liability for breach is unenforceable to the extent that it: (1) relieves the trustee of liability for breach of trust committed in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries; or (2) was inserted as the result of an abuse by the trustee of a fiduciary or confidential relationship to the settlor.”
Accordingly, up until an appellate decision addresses the scope of this statutory section, it appears that most exculpatory provisions may be valid. The principal limitation is that a trust instrument cannot erase breaches of trust arising out of bad faith or reckless indifference to the trust or its beneficiaries. Therefore, when evaluating potential claims against a trustee for breach of trust, it is extremely important to identify exculpatory clauses and determine whether that inhibits prospective suits. 

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