Liability of Trustees and Rights of Persons Dealing with Trustees

KRS tit. XXXIII, ch. 386B, subch. 10

in effect

KRS 386B.10-010 Remedies for breach of trust

386B.10-010. Remedies for breach of trust (1) A violation by a trustee of a duty the trustee owes to a beneficiary is a breach of trust. (2) To remedy a breach of trust that has occurred or may occur, the court may: (a) Compel the trustee to perform the trustee's duties; (b) Enjoin the trustee from committing a breach of trust; (c) Compel the trustee to redress a breach of trust by paying money, restoring property, or other means; (d) Order a trustee to account; (e) Appoint a special fiduciary to take possession of the trust property and administer the trust; (f) Suspend the trustee; (g) Remove the trustee under KRS 386B.7-060; (h) Reduce or deny compensation to the trustee; (i) Subject to KRS 386B.10-110, void an act of the trustee, impose a lien or a constructive trust on trust property, or trace trust property wrongfully disposed of and recover the property or its proceeds; or (j) Order any other appropriate relief. Effective: July 15, 2014 History: Created 2014 Ky. Acts ch. 25, sec. 79, effective July 15, 2014.

KRS 386B.10-020 Damages for breach of trust

386B.10-020. Damages for breach of trust (1) A trustee who commits a breach of trust is liable to the beneficiaries affected for the greater of: (a) The amount required to restore the value of the trust property and trust distributions to what they would have been had the breach not occurred; or (b) The profit the trustee made by reason of the breach. (2) Except as otherwise provided in this subsection, if more than one (1) trustee is liable to the beneficiaries for a breach of trust, a trustee is entitled to contribution from the other trustee or trustees. A trustee is not entitled to contribution if the trustee was substantially more at fault than another trustee or if the trustee committed the breach of trust in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries. A trustee who received a benefit from the breach of trust is not entitled to contribution from another trustee to the extent of the benefit received. Effective: July 15, 2014 History: Created 2014 Ky. Acts ch. 25, sec. 80, effective July 15, 2014.

KRS 386B.10-030 Damages in absence of breach

386B.10-030. Damages in absence of breach (1) A trustee is accountable to an affected beneficiary for any profit made by the trustee arising from the administration of the trust, except the reasonable fee charged by the trustee, even absent a breach of trust. (2) Absent a breach of trust, a trustee is not liable to a beneficiary for a loss or depreciation in the value of trust property or for not having made a profit. Effective: July 15, 2014 History: Created 2014 Ky. Acts ch. 25, sec. 81, effective July 15, 2014.

KRS 386B.10-040 Attorney's fees and costs

386B.10-040. Attorney's fees and costs In a judicial proceeding involving the administration of a trust, the court, as justice and equity may require, may award costs and expenses, including reasonable attorney's fees, to any party, to be paid by another party or from the trust that is the subject of the controversy. Effective: July 15, 2014 History: Created 2014 Ky. Acts ch. 25, sec. 82, effective July 15, 2014.

KRS 386B.10-050 Limitation of action against trustee

386B.10-050. Limitation of action against trustee (1) For the purposes of this section, a "report" is an account statement or other form of written disclosure made by the trustee to the beneficiary. (2) A beneficiary may not commence a proceeding against a trustee for breach of trust more than one (1) year after the date the beneficiary or a representative of the beneficiary was sent a report that adequately disclosed the existence of a potential claim for breach of trust and informed the beneficiary of the time allowed for commencing a proceeding. (3) A report adequately discloses the existence of a potential claim for breach of trust if it provides sufficient information so that the beneficiary or representative knows of the potential claim or should have inquired into its existence. (4) If subsection (2) of this section does not apply, a judicial proceeding by a beneficiary against a trustee for breach of trust shall be commenced within five (5) years of discovery of an injury by a trustee to the rights of the beneficiary. Effective: June 24, 2015 History: Amended 2015 Ky. Acts ch. 121, sec. 1, effective June 24, 2015. -- Created 2014 Ky. Acts ch. 25, sec. 83, effective July 15, 2014.

KRS 386B.10-060 Reliance on trust instrument

386B.10-060. Reliance on trust instrument A trustee who acts in reasonable reliance on the terms of the trust as expressed in the trust instrument is not liable to a beneficiary for a breach of trust to the extent the breach resulted from the reliance. Effective: July 15, 2014 History: Created 2014 Ky. Acts ch. 25, sec. 84, effective July 15, 2014.

KRS 386B.10-070 Event affecting administration or distribution

386B.10-070. Event affecting administration or distribution If the happening of an event, including marriage, divorce, performance of educational requirements, or death, affects the administration or distribution of a trust, a trustee who has exercised reasonable care to ascertain the happening of the event is not liable for a loss resulting from the trustee's lack of knowledge. Effective: July 15, 2014 History: Created 2014 Ky. Acts ch. 25, sec. 85, effective July 15, 2014.

KRS 386B.10-080 Exculpation of trustee

386B.10-080. Exculpation of trustee (1) A term of a trust relieving a trustee of liability for breach of trust is unenforceable to the extent that it: (a) 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 (b) Was inserted as the result of an abuse by the trustee of a fiduciary or confidential relationship to the settlor. (2) An exculpatory term 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 term is fair under the circumstances and that its existence and contents were adequately communicated to the settlor. The requirements of this subsection are satisfied if the settlor was represented by independent counsel at the time the exculpatory term was drafted or caused to be drafted. Effective: July 15, 2014 History: Created 2014 Ky. Acts ch. 25, sec. 86, effective July 15, 2014.

KRS 386B.10-090 Beneficiary's consent, release, or ratification

386B.10-090. Beneficiary's consent, release, or ratification A trustee shall not be liable to a beneficiary for breach of trust if the beneficiary, while having capacity, consented to the conduct constituting the breach, released the trustee from liability for the breach, or ratified the transaction constituting the breach, unless: (1) The consent, release, or ratification of the beneficiary was induced by improper conduct of the trustee; or (2) At the time of the consent, release, or ratification, the beneficiary did not know of the beneficiary's rights or of the material facts relating to the breach. Effective: July 15, 2014 History: Created 2014 Ky. Acts ch. 25, sec. 87, effective July 15, 2014.

KRS 386B.10-100 Limitation on personal liability of trustee

386B.10-100. Limitation on personal liability of trustee (1) Except as otherwise provided in the contract, a trustee is not personally liable on a contract properly entered into in the trustee's fiduciary capacity in the course of administering the trust if the trustee in the contract disclosed the fiduciary capacity. (2) 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, including liability for violation of environmental law, only if the trustee is personally at fault. (3) A claim based on a contract entered into by a trustee in the trustee's fiduciary capacity, on an obligation arising from ownership or control of trust property, or on a tort committed in the course of administering a trust, may be asserted in a judicial proceeding against the trustee in the trustee's fiduciary capacity, whether or not the trustee is personally liable for the claim. (4) The question of liability as between the trust estate and the trustee individually may be determined in a proceeding for accounting, surcharge, or indemnification or other appropriate proceeding. Effective: July 15, 2014 History: Created 2014 Ky. Acts ch. 25, sec. 88, effective July 15, 2014.

KRS 386B.10-110 Protection of person dealing with trustee

386B.10-110. Protection of person dealing with trustee (1) A person other than a beneficiary who in good faith assists a trustee, or who in good faith and for value deals with a trustee, without knowledge that the trustee is exceeding or improperly exercising the trustee's powers is protected from liability as if the trustee properly exercised the power. (2) A person other than a beneficiary who in good faith deals with a trustee is not required to inquire into the extent of the trustee's powers or the propriety of their exercise. (3) A person who in good faith delivers assets to a trustee need not ensure their proper application. (4) A person other than a beneficiary who in good faith assists a former trustee, or who in good faith and for value deals with a former trustee, without knowledge that the trusteeship has terminated is protected from liability as if the former trustee were still a trustee. (5) Comparable protective provisions of other laws relating to commercial transactions or transfer of securities by fiduciaries prevail over the protection provided by this section. Effective: July 15, 2014 History: Created 2014 Ky. Acts ch. 25, sec. 89, effective July 15, 2014.

KRS 386B.10-120 Certification of trust

386B.10-120. Certification of trust (1) Instead of furnishing a copy of the trust instrument to a person other than a beneficiary, the trustee may furnish to the person a certification of trust containing the following information: (a) That the trust exists and the date the trust instrument was signed; (b) The identity of the settlor; (c) The identity and address of the currently acting trustee; (d) The powers of the trustee; (e) The revocability or irrevocability of the trust and the identity of any person holding a power to revoke the trust; (f) The authority of cotrustees to sign or otherwise authenticate and whether all or less than all are required in order to exercise powers of the trustee; and (g) The manner of taking title to trust property. (2) A certification of trust may be signed or otherwise authenticated by any trustee. (3) A certification of trust shall state that the trust has not been revoked, modified, or amended in any manner that would cause the representations contained in the certification of trust to be incorrect. (4) A certification of trust need not contain the dispositive terms of a trust. (5) A recipient of a certification of trust may require the trustee to furnish copies of those excerpts from the original trust instrument and later amendments which designate the trustee and confer upon the trustee the power to act in the pending transaction. (6) A person who acts in reliance upon a certification of trust without knowledge that the representations contained therein are incorrect is not liable to any person for so acting and may assume without inquiry the existence of the facts contained in the certification. Knowledge of the terms of the trust may not be inferred solely from the fact that a copy of all or part of the trust instrument is held by the person relying upon the certification. (7) A person who in good faith enters into a transaction in reliance upon a certification of trust may enforce the transaction against the trust property as if the representations contained in the certification were correct. (8) A person making a demand for the trust instrument in addition to a certification of trust or excerpts is liable for damages if the court determines that the person did not act in good faith in demanding the trust instrument. (9) This section shall not limit the right of a person to obtain a copy of the trust instrument in a judicial proceeding concerning the trust. (10) The District Court shall have exclusive jurisdiction over matters under this section. Effective: July 15, 2014 History: Created 2014 Ky. Acts ch. 25, sec. 90, effective July 15, 2014.

Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=42931Fetched: 10/20/2026