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G.S. ch. 36C, art. 10

G.S. ch. 36C, art. 10
in effect

G.S. 36C-10-1001 Remedies for breach of trust.

§ 36C-10-1001.  Remedies for breach of trust. (a) A violation by a trustee of a duty the trustee owes under a trust is a breach of trust. (b) To remedy a breach of trust that has occurred or may occur, the court may: (1) Compel the trustee to perform the trustee's duties; (2) Enjoin the trustee from committing a breach of trust; (3) Compel the trustee to redress a breach of trust by paying money, restoring property, or other means; (4) Order a trustee to account; (5) Appoint a special fiduciary to take possession of the trust property and administer the trust; (6) Suspend the trustee; (7) Remove the trustee as provided in G.S. 36C-7-706; (8) Reduce or deny compensation to the trustee; (9) Subject to G.S. 36C-10-1012, 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 (10) Order any other appropriate relief. (c) The court may, for cause shown, relieve a trustee from liability for any breach of trust, or wholly or partly excuse a trustee who has acted honestly and reasonably from liability for a breach of trust. (2005-192, s. 2.)

G.S. 36C-10-1002 Damages for breach of trust.

§ 36C-10-1002.  Damages for breach of trust. (a) A trustee who commits a breach of trust is liable for the greater of: (1) 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 (2) The profit the trustee made by reason of the breach. (b) Except as otherwise provided in this subsection, if more than one 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. (2005-192, s. 2.)

G.S. 36C-10-1003 Liability in absence of breach.

§ 36C-10-1003.  Liability in absence of breach. (a) A trustee is accountable for any profit made by the trustee arising from the administration of the trust, even absent a breach of trust. Nothing in this section limits a trustee's right to compensation under G.S. 36C-7-708 or payments allowed under G.S. 36C-8-802(f). (b) Absent a breach of trust, a trustee is not liable for a loss or depreciation in the value of trust property or for not having made a profit. (2005-192, s. 2.)

G.S. 36C-10-1004 Attorneys' fees and costs.

§ 36C-10-1004.  Attorneys' fees and costs. In a judicial proceeding involving the administration of a trust, the court may award costs and expenses, including reasonable attorneys' fees, as provided in the General Statutes, except that, in the case of a proceeding to establish the validity of a trust under Article 4C of this Chapter, the court shall allow for attorneys' fees for the attorneys of a party contesting the proceeding only if the court finds the party had reasonable grounds for contesting the proceeding. (2005-192, s. 2; 2021-53, s. 1.3.)

G.S. 36C-10-1005 Limitation of action against trustee.

§ 36C-10-1005.  Limitation of action against trustee. (a) No proceeding against a trustee for breach of trust may be commenced more than five years after the first to occur of: (i) the removal, resignation, or death of the trustee; (ii) the termination of the beneficiary's interest in the trust; or (iii) the termination of the trust. (b) Except as provided in subsection (a) of this section, Chapter 1 of the General Statutes governs the limitations of actions on judicial proceedings involving trusts. However, for purposes of those limitations both of the following apply: (1) On the date that any limitation starts running as to a person with respect to a claim held by the person involving a trust, the limitation also shall start running as to all other persons the person would be entitled to represent under Article 3 of this Chapter, whether or not the person consented to serve as a representative. (2) G.S. 1-17 of the General Statutes shall not apply to toll the running of the limitation as to the persons described in subdivision (1) of this subsection. Those persons shall be treated as if they were under no disability on the date that the limitation starts running. (2005-192, s. 2; 2015-205, s. 6.)

G.S. 36C-10-1006 Reliance on trust instrument.

§ 36C-10-1006.  Reliance on trust instrument. A trustee who acts in reasonable reliance on the terms of the trust as expressed in a trust instrument is not liable for a breach of trust to the extent that the breach resulted from the reliance. (2005-192, s. 2.)

G.S. 36C-10-1007 Event affecting administration or distribution.

§ 36C-10-1007.  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. (2005-192, s. 2.)

G.S. 36C-10-1008 Exculpation of trustee.

§ 36C-10-1008.  Exculpation of trustee. A term of a trust relieving a trustee of liability for breach of trust is unenforceable to the extent that it 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. (2005-192, s. 2.)

G.S. 36C-10-1009 Beneficiary's consent, release, or ratification.

§ 36C-10-1009.  Beneficiary's consent, release, or ratification. (a) A trustee is not liable to a beneficiary for breach of trust if the beneficiary 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 have knowledge of the beneficiary's rights or of the material facts relating to the breach. (b) No consideration is required for the consent, release, or ratification to be valid. (2005-192, s. 2.)

G.S. 36C-10-1010 Limitation on personal liability of trustee.

§ 36C-10-1010.  Limitation on personal liability of trustee. (a) 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 making the contract disclosed the fiduciary capacity. The addition of the phrase "trustee" or "as trustee" or a similar designation to the signature of a trustee on a written contract is considered prima facie evidence of a disclosure of fiduciary capacity. (b) 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. (c) 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. Any judgment rendered in favor of a claimant in such a judicial proceeding against a trust may be recovered from the trust property without proof that the trustee could have obtained reimbursement from the trust if the trustee had paid the claim. (d) A trustee is entitled to indemnity from the trust for any claim, other than a breach of trust, for which the trustee is liable: (1) If the claim arose from a common incident of activity in which the trustee was properly engaged for the trust; (2) If the trustee was not personally at fault; or (3) To the extent that the trustee's actions increased the value of trust property. (e) A decision by a trustee not to inspect property, or to decline to accept property, shall not create any inference as to liability, under any environmental law, with respect to that property. A trustee shall have no liability for a decrease in value of property in a trust by reason of the trustee's compliance with any environmental law, including reporting requirements. (2005-192, s. 2.)

G.S. 36C-10-1011 Interest as general partner.

§ 36C-10-1011.  Interest as general partner. (a) Except as otherwise provided in subsection (c) of this section or unless personal liability is imposed in the contract, a trustee who holds, in a fiduciary capacity, an interest as a general partner in a general or limited partnership is not personally liable on a contract entered into by the partnership if the fiduciary capacity was disclosed. The addition of the phrase "trustee" or "as trustee" or a similar designation to the signature of a trustee on a written partnership document is considered prima facie evidence of a disclosure of fiduciary capacity. (b) A trustee who holds, in a fiduciary capacity, an interest as a general partner is not personally liable for torts committed by the partnership or for obligations arising from ownership or control of the interest unless the trustee is personally at fault. This subsection does not apply to additional ownership interests of the trustee held in a nonfiduciary capacity. (c) If the settlor transfers an existing general partnership interest to a revocable trust, the settlor remains personally liable for partnership obligations as if the settlor were a general partner. (2005-192, s. 2.)

G.S. 36C-10-1012 Protection of person dealing with trustee.

§ 36C-10-1012.  Protection of person dealing with trustee. (a) 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. (b) 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. (c) A person who in good faith delivers assets to a trustee need not ensure their proper application. (d) 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. (e) Comparable protective provisions of other laws relating to commercial transactions or transfer of securities by fiduciaries prevail over the protection provided by this section. (f) A person is not required to obtain a certification under G.S. 36C-10-1013 in order to be entitled to the protections of this section. (2005-192, s. 2.)

G.S. 36C-10-1013 Certification of trust.

§ 36C-10-1013.  Certification of trust. (a) 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: (1) The existence of the trust and the date the trust instrument was executed; (2) The identity of the settlor, unless withheld under a provision in the trust instrument; (3) The identity and address of the currently acting trustee; (4) The powers of the trustee; (5) The revocability or irrevocability of the trust and the identity of any person holding a power to revoke the trust; (6) 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; (7) The trust's taxpayer identification number; and (8) The manner of taking title to trust property. (b) Any trustee may sign or otherwise authenticate a certification of trust. (c) A certification of trust must 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. (d) A certification of trust need not contain the dispositive terms of a trust. (e) 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 that designate the trustee and confer upon the trustee the power to act in the pending transaction. (f) A person who acts in reliance upon a certification of trust without knowledge that the representations contained in the certification 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 the person relying upon the certification holds a copy of all or part of the trust instrument. (g) 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. (h) 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. (i) This section does not limit the right of a person to obtain a copy of the trust instrument in a judicial proceeding concerning the trust. (j) In transactions involving real property, a person who acts in reliance upon a certification of trust may require that the certification of trust be executed and acknowledged in a manner that will permit its registration in the office of the register of deeds in the county where the real property is located. The certification of trust need not contain the trust's taxpayer identification number if that taxpayer identification number is also the social security number of a grantor. However, the trust's taxpayer identification number shall be certified by the trustee to the person acting in reliance upon the certification of trust in a manner reasonably satisfactory to that person. (2005-192, s. 2.)
Source: North Carolina General Assembly (ncleg.gov)URL: https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/ByChapter/Chapter_36C.htmlFetched: 10/19/2026

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