Exculpation of trustee

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A provision of a trust relieving a trustee of liability for breach of trust 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.

Except for provisions intended to provide protection for carrying out a stated purpose in the trust instrument, an exculpatory provision drafted or caused to be drafted by the trustee is invalid as an abuse of a fiduciary or confidential relationship unless the trustee proves that the exculpatory provision is fair under the circumstances and that its existence and contents were adequately communicated to the settlor.


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