Chapter 5810: BREACH OF TRUST

5810.01 Breach of trust defined - judicial remedies.

(A) A violation by a trustee of a duty the trustee owes to a beneficiary is a breach of trust.

(B) To remedy a breach of trust that has occurred or may occur, the court may do any of the following:

(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 section 5807.06 of the Revised Code;

(8) Reduce or deny compensation to the trustee;

(9) Subject to section 5810.12 of the Revised Code, 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;

(10) Order any other appropriate relief.

Cite as R.C. § 5810.01

Effective Date: 01-01-2007

5810.02 Liability to beneficiaries for breach - contribution.

(A) A trustee who commits a breach of trust is liable to the beneficiaries affected for the greater of the following:

(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;

(2) The profit the trustee made by reason of the breach.

(B) Except as otherwise provided in this division, 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.

Cite as R.C. § 5810.02

Effective Date: 01-01-2007

5810.03 Trustee not accountable or liable for profit or loss absent breach.

(A) Absent a breach of trust, a trustee is not accountable to a beneficiary for any profit made by the trustee arising from the administration of the trust.

(B) 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.

Cite as R.C. § 5810.03

Effective Date: 01-01-2007

5810.04 Award of costs, expenses, and attorney fees from trust.

In a judicial proceeding involving the administration of a trust, including a trust that contains a spendthrift provision, the court, as justice and equity may require, may award costs, expenses, and reasonable attorney's fees to any party, to be paid by another party, from the trust that is the subject of the controversy, or from a party's interest in the trust that is the subject of the controversy.

Cite as R.C. § 5810.04

Effective Date: 01-01-2007

5810.05 Limitations period for action against trustee.

(A) A beneficiary may not commence a proceeding against a trustee for breach of trust more than two years after the date the beneficiary, a representative of the beneficiary, or a beneficiary surrogate is sent a report that adequately discloses the existence of a potential claim for breach of trust and informs the beneficiary, the representative of the beneficiary, or the beneficiary surrogate of the time allowed for commencing a proceeding against a trustee.

(B) A report adequately discloses the existence of a potential claim for breach of trust if it provides sufficient information so that the beneficiary or the representative of the beneficiary knows of the potential claim or should know of the existence of the potential claim.

(C) If division (A) of this section does not apply, notwithstanding section 2305.09 of the Revised Code, a judicial proceeding by a beneficiary against a trustee for breach of trust must be commenced within four years after the first of the following to occur:

(1) The removal, resignation, or death of the trustee;

(2) The termination of the beneficiary's interest in the trust;

(3) The termination of the trust;

(4) The time at which the beneficiary knew or should have known of the breach of trust.

(D) Nothing in Chapters 5801. to 5811. of the Revised Code limits the operation of any principle of law or equity, including the doctrines of laches, unclean hands, estoppel, and waiver, that can bar claims.

Cite as R.C. § 5810.05

Effective Date: 01-01-2007; 2008 HB499 09-12-2008

5810.06 Trustee reliance on terms of trust.

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.

Cite as R.C. § 5810.06

Effective Date: 01-01-2007

5810.07 Reasonable care to ascertain material event.

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.

Cite as R.C. § 5810.07

Effective Date: 01-01-2007

5810.08 Enforceability of exculpatory trust term.

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 or was inserted as the result of an abuse by the trustee of a fiduciary or confidential relationship to the settlor.

Cite as R.C. § 5810.08

Effective Date: 01-01-2007

5810.09 Beneficiary or representative's consent to conduct constituting breach.

A trustee is not liable to a beneficiary for breach of trust if the beneficiary or the beneficiary's representative under the representation provisions of Chapter 5803. of the Revised Code consented to the conduct constituting the breach, released the trustee from liability for the breach, or ratified the transaction constituting the breach, unless the consent, release, or ratification of the beneficiary or representative was induced by improper conduct of the trustee or, at the time of the consent, release, or ratification, the beneficiary or representative did not know of the beneficiary's rights or of the material facts relating to the breach.

This section applies regardless of whether the conduct being consented to, released, or ratified constitutes one or more breaches of fiduciary duty, violates one or more provisions of the Revised Code, or is taken without required court approval.

Cite as R.C. § 5810.09

Amended by 129th General AssemblyFile No.65, SB 117, §1, eff. 3/22/2012.

Effective Date: 01-01-2007

5810.10 Personal contract and tort liability of trustee.

(A) Except as otherwise provided in the contract, for contracts entered into on or after March 22, 1984, 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. The words "trustee," "as trustee," "fiduciary," or "as fiduciary," or other words that indicate one's trustee capacity, following the name or signature of a trustee are sufficient disclosure for purposes of this division.

(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.

Cite as R.C. § 5810.10

Effective Date: 01-01-2007

5810.11 Personal liability of trustee on contract as partner.

(A)

(1) Except as otherwise provided in division (C) of this section or unless personal liability is imposed in the contract, a trustee who holds an interest as a general partner in a general or limited partnership is not personally liable on a contract entered into by the partnership after the trust's acquisition of the interest if the fiduciary capacity was disclosed. A partnership certificate that is filed pursuant to Chapter 1776. or 1777. or another chapter of the Revised Code and that indicates that a trustee holds a general partnership interest in a fiduciary capacity by the use following the name or signature of the trustee of the words "as trustee" or other words that indicate the trustee's fiduciary capacity constitutes a sufficient disclosure for purposes of this division.

(2) If a partnership certificate is not required to be filed pursuant to Chapter 1776. or 1777. or another chapter of the Revised Code, a sufficient disclosure for purposes of division (A) of this section can be made by a trustee if a certificate that is filed with the recorder of the county in which the partnership's principal office or place of business is situated and with the recorder of each county in which the partnership owns real estate satisfies all of the following requirements:

(a) The certificate states in full the names of all persons holding interests in the partnership and their places of residence.

(b) The certificate is signed by all persons who are general partners in the partnership and is acknowledged by a person authorized to take acknowledgements of deeds.

(c) The certificate uses the words "trustee under the (will or trust) of (name of decedent or settlor)," or other words that indicate the trustee's fiduciary capacity, following the trustee's name or signature.

(3) A contract or other written instrument that is delivered to a party that contracts with the partnership in which a trustee holds a general partnership interest in a fiduciary capacity and that indicates that the trustee so holds the interest constitutes a disclosure for purposes of division (A)(1) of this section with respect to transactions between the party and the partnership. If a disclosure has been made by a certificate in accordance with division (A) of this section, a disclosure for purposes of division (A) of this section with respect to such transactions exists regardless of whether a contract or other instrument indicates the trustee holds the general partnership interest in a fiduciary capacity.

(B) Except as otherwise provided in division (C) of this section, a trustee who holds an interest as a general partner in a general or limited partnership 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.

(C) The immunity provided by this section does not apply if an interest in the partnership is held by the trustee in a capacity other than that of trustee or is held by the trustee's spouse or one or more of the trustee's descendants, siblings, or parents, or the spouse of any of them.

(D) If the trustee of a revocable trust holds an interest as a general partner in a general or limited partnership, the settlor is personally liable for contracts and other obligations of the partnership as if the settlor were a general partner.

(E) The liability limitations in this section apply to trustees as partners notwithstanding the broader personal liabilities otherwise imposed by any partnership law.

(F) If a trust is identified as a partner, the reference is deemed to be to, and the partner is, the current trustee or trustees of the trust and their successors as trustees.

Cite as R.C. § 5810.11

Effective Date: 01-01-2007; 2008 HB332 08-06-2008; 2008 HB499 09-12-2008

5810.12 Person assisting or dealing with trustee in good faith.

(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 is not required to 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.

Cite as R.C. § 5810.12

Effective Date: 01-01-2007

5810.13 Certification of trust furnished to person not beneficiary.

(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 all of the following information:

(1) A statement that the trust exists and the date the trust instrument was executed;

(2) The identity of the settlor;

(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.

(B) Any trustee may sign or otherwise authenticate a certification of trust.

(C) 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.

(D) A certification of trust is not required to contain the dispositive terms of a trust.

(E) A certification of trust may establish the identity of the trustee and any succession of trustees under division (B) or (C) of section 5810.14 of the Revised Code.

(F) 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.

(G) 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 a copy of all or part of the trust instrument is held by the person relying upon the certification.

(H) 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.

(I) This section does not affect the use or validity of a memorandum of trust under section 5301.255 of the Revised Code.

(J) 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.

Cite as R.C. § 5810.13

Amended by 129th General AssemblyFile No.65, SB 117, §1, eff. 3/22/2012.

Effective Date: 01-01-2007; 2008 HB499 09-12-2008

5810.14 Transfer of personal property to trustee.

(A) Personal property may be transferred to a trustee as authorized by section 5804.01 of the Revised Code by executing the necessary written instrument that identifies the personal property transferred and identifies the trustee by name followed by the designation "trustee."

(B) The future transfer of personal property to a trustee as a designated beneficiary, including, but not limited to, a transfer on death designation or payable on death designation, participation in a joint ownership arrangement, or any other contractual transfer arrangement, that is made by executing the necessary written instrument identifying the trustee by name followed by the designation "trustee" shall be considered a transfer of the personal property to the trustee serving at the time of the future transfer. A certification of trust under section 5810.13 of the Revised Code may establish the identity of the trustee and any succession of trustees.

(C) A written instrument transferring personal property to a trust or a written instrument providing for the future transfer of personal property to a trust, by identifying the trust without identifying the trustee, shall be considered a transfer of the personal property to the trustee serving at the time of transfer. A certification of trust under section 5810.13 of the Revised Code may establish the identity of the trustee and any succession of trustees.

(D) An instrument of transfer under this section may, but is not required to, contain any additional identifying information, including the trust name, the name of the settlor, the date of trust creation, and the date of applicable trust amendments.

(E) Nothing in this section is intended to affect the operation of section 5301.03 of the Revised Code.

(F) Nothing in this section is intended to affect or be in conflict with division (E) of section 5301.071 of the Revised Code that addresses transfers of real property to or from trusts and trustees.

Cite as R.C. § 5810.14

Added by 129th General AssemblyFile No.65, SB 117, §1, eff. 3/22/2012.