Liability to third persons
Sec. 10. (Liability to Third Persons)
(a) Unless the terms of the contract or other non-negotiable
obligation expressly provide otherwise, the trustee is not personally
liable on a contract or other non-negotiable obligation with a third
person made by him in the administration of the trust.
(b) When a third person is entitled to compensation for injury
suffered in the course of the administration of the trust:
(1) If the injury is the result of the trustee's personal act or
omission as trustee, the trustee will be personally liable and the
injured party will be entitled to satisfaction of his claim from the
trustee's individual property first and then, to the extent the claim is
yet unsatisfied, from the trust estate.
(2) If the injury is the result of the act or omission of an agent of
the trustee, and the agent was properly selected and supervised and
there was no improper delegation of authority to the agent, the
injured party will be entitled to satisfaction of his claim from the
trust estate first and then, to the extent that the claim is yet
unsatisfied, from the trustee's individual property.
(3) If the injury is the result of the act or omission of the settlor or
his agent, and not that of the trustee or his agent, the injured party
will be entitled to satisfaction of his claim from the trust estate and
not from the trustee's individual property.
(4) The question of ultimate liability as between the trust estate
and the trustee individually, if it is to be determined, shall be
determined in a proceeding for accounting, surcharge or
indemnification.
(Formerly: Acts 1971, P.L.416, SEC.4.)
Last modified: May 27, 2006