# Title 59 — Trusts, Uses, and Powers

## Chapter 59-18 — Trustee Liability and Dealings

### § 59-18-01. (1001) 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 compel the
trustee to perform the trustee's duties; enjoin the trustee from committing a breach of
trust; compel the trustee to redress a breach of trust by paying money, restoring
property, or other means; order a trustee to account; appoint a special fiduciary to take
possession of the trust property and administer the trust; suspend the trustee; remove
the trustee as provided in section 59-15-06; reduce or deny compensation to the
trustee; subject to section 59-18-12, 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 order any other appropriate relief.
### § 59-18-01.1. Presumption against trustee.

A transaction between a trustee and the trust's beneficiary during the existence of the trust
or while the influence acquired by the trustee remains by which the trustee obtains any
advantage from the trust's beneficiary is presumed to be entered by the trust's beneficiary
without sufficient consideration and under undue influence. This presumption is a rebuttable
presumption.
### § 59-18-02. (1002) Damages for breach of trust.

1. A trustee who commits a breach of trust is liable to the beneficiaries affected for the
greater of 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 the profit
the trustee made by reason of the breach.
2. 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.
### § 59-18-03. (1003) Damages in absence of breach.

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.
### § 59-18-04. Reserved.

### § 59-18-05. (1005) Limitation of action against trustee.

1. A beneficiary may not commence a proceeding against a trustee for breach of trust
more than one 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 in the report or in a separate notice
accompanying the report of the time allowed for commencing a proceeding.
2. 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.
3. If subsection 1 does not apply, a judicial proceeding by a beneficiary against a trustee
for breach of trust must be commenced within five years after whichever occurs first:
the removal, resignation, or death of the trustee; the termination of the beneficiary's
interest in the trust; or the termination of the trust.

### § 59-18-06. (1006) 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.
### § 59-18-07. (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.
### § 59-18-08. (1008) Exculpation of trustee.

1. A term of a trust relieving a trustee of liability for breach of trust is unenforceable to the
extent that the term relieves the trustee of liability for breach of trust committed in bad
faith or with reckless indifference to the purposes of the trust or was inserted as the
result of an abuse by the trustee of a fiduciary or confidential relationship to the settlor.
2. Unless the settlor was represented by an attorney not employed by the trustee with
respect to the trust containing the exculpatory term, 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.
### § 59-18-09. (1009) Beneficiary's consent, release, or ratification.

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 the consent, release, or ratification of the beneficiary
was induced by improper conduct of the trustee or at the time of the consent, release, or
ratification, the beneficiary lacked capacity or did not know of the beneficiary's rights or of the
material facts relating to the breach.
### § 59-18-10. (1010) 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.
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 a 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. Whenever a trust instrument reserves to the settlor, or vests in an advisory or
investment committee, or in any other person, including one or more cotrustees to the
exclusion of the trustee or to the exclusion of one or more of several trustees, authority
to direct the making or retention of any investment, the excluded trustee or trustees
are not liable, either individually or as a fiduciary, for any loss resulting from the making
or retention of any investment pursuant to such direction.
5. In the absence of actual knowledge or information that would cause a reasonable
trustee to inquire further, a trustee may not be held liable for failure to take necessary
steps to compel the redress of any breach of trust or fiduciary duty by any predecessor

personal representative, trustee, or other fiduciary. This section may not be construed
to limit the fiduciary liability of any trustee for the acts or omissions of the trustee with
respect to the trust estate.
### § 59-18-11. (1011) Interest as general partner.

1. Except as otherwise provided in subsection 3 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. In the contract;
b. In a registration of the partnership as a limited liability partnership filed pursuant
to chapter 45-22 in which the trustee is listed as a managing partner; or
c. In a certificate of limited liability limited partnership filed pursuant to chapter 45-23
in which the trustee is listed as a general partner.
2. Except as otherwise provided in subsection 3, a trustee who holds 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.
3. 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.
4. If the trustee of a revocable trust holds an interest as a general partner, the settlor is
personally liable for contracts and other obligations of the partnership as if the settlor
were a general partner.
### § 59-18-12. (1012) 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.
### § 59-18-13. (1013) Certification of trust.

1. Unless otherwise required by chapter 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15,
59-16, 59-17, 59-18, or 59-19, the trustee may furnish to the person a certification of
trust containing information that includes that the trust exists and the effective date of
the trust instrument, the name of the trust, if a name is given, the identity of each
settlor, the identity and address of the currently acting trustee, the applicable powers of
the trustee, which may make reference to the powers set forth in chapters 59-09,
59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19, the
revocability or irrevocability of the trust and the identity of any person holding a power
to revoke the trust, and 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.
2. A certification of trust may be signed or otherwise authenticated by any trustee.

3. 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.
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 does not limit the right of a person to obtain a copy of the trust instrument
in a judicial proceeding concerning the trust.
