Is the cost of breach by a trustee always the restoration of the trust fund?
Claimants are often keen to allege breach of trust since, if established, they are entitled to have the trust fund reconstituted. Arguments as to remoteness or foreseeability are not available to the trustee to try and reduce the quantum of the claim. Compensation is due even if the loss in question could not have been reasonably foreseen.
However, that does not mean that where there is wrongdoing by a trustee no defence can ever be raised. This article considers the important distinction between breaches of trust and breaches of a trustee’s duty of care.
A trustee will be in breach of trust if he acts in a way that is not authorised either by the trust document or by law. For example, if a trustee breaches a fiduciary duty such as the duty not to profit from the trust; invests the trust fund in a way not permitted by his powers of investment; or distributes assets to a beneficiary who is not entitled to them under the terms of the trust…
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