Subchapter X. Liability of Trustees and Rights of Persons Dealing with Trustee.

§ 19–1310.01. Remedies for breach of trust.

(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:

(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 19-1307.06;

(8) Reduce or deny compensation to the trustee;

(9) Subject to section 19-1310.12, 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

(10) Order any other appropriate relief.

§ 19–1310.02. Damages for breach of trust.

(a) A trustee who commits a breach of trust is liable to the beneficiaries affected 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.

§ 19–1310.03. Damages in absence of breach.

(a) A trustee is accountable to an affected beneficiary for any profit made by the trustee arising from the administration of the trust, even absent a breach of 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.

§ 19–1310.04. Attorney’s fees and costs.

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

§ 19–1310.05. Limitation of action against trustee.

(a) 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 of the time allowed for commencing a proceeding.

(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 representative knows of the potential claim or should have inquired into its existence.

(c) If subsection (a) of this section does not apply, a judicial proceeding by a beneficiary against a trustee for breach of trust must be commenced within 3 years after the first to occur of:

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

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

(3) The termination of the trust.

§ 19–1310.06. 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.

§ 19–1310.07. Event affecting administration or distribution.

If the happening of an event, including marriage, divorce, performance of educational requirements, the attainment of a specified age, 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.

§ 19–1310.08. Exculpation of trustee.

(a) A term of a trust relieving a trustee of liability for breach of trust is unenforceable to the extent that it:

(1) 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

(2) Was inserted as the result of an abuse by the trustee of a fiduciary or confidential relationship to the settlor.

(b) 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.

§ 19–1310.09. Beneficiary's consent, release, or ratification.

(a) For the purposes of this section, the term "interested party" means a beneficiary, representative of a beneficiary, co-trustee, successor trustee, or any other person having an interest in or authority over a trust.

(b) 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 know of the beneficiary's rights or of the material facts relating to the breach.

(c) A trustee may elect to follow the procedures set forth in subsection (d) of this section concerning the release of the trustee from liability for the administration of the trust when any of the following occur:

(1) A trust terminates pursuant to the terms of the trust;

(2) A trust terminates early pursuant to § 19-1304.11; or

(3) A trustee resigns or is removed.

(d)(1) A trustee seeking a release of the trustee from liability under subsection (c) of this section shall send to the interested party from whom the trustee is seeking the release, by first-class and certified mail, return receipt requested, all of the following:

(A) A statement showing the fair market value of the assets to be distributed from a terminating trust or to a successor trustee;

(B) A trust accounting for the prior 2 years showing all receipts and disbursements and inventory value of the net assets;

(D) The amount of any fees, including trustee fees, remaining to be paid;

(E) Notice that the trust is terminating, or that the trustee has resigned or been removed, and a clear and conspicuous statement providing that if no objections are received from the interested party within 120 days after the notice was sent by the trustee, or if the interested party signs the waiver described in subsection (f)(2) of this section, that the interested party is barred from bringing claims against the trustee for breach of trust;

(F) A statement from the trustee that the trustee is unaware of any undisclosed information that could give rise to a claim by an interested party;

(G) The name and mailing address of the trustee; and

(H) The name and telephone number of a person who may be contacted for additional information.

(2) The trustee may also provide the information described in this subsection to any other person who the trustee reasonably believes may have an interest in the trust.

(e)(1) If, after receiving the notice and trust information described in subsection (d) of this section, an interested party that received the notice and trust information objects to a disclosed act or omission, the interested party shall provide written notice of the objection to the trustee not later than 120 days after the notice was sent by the trustee. If no written objection is provided in the 120-day time period, the information provided under subsection (d) of this section shall be considered ratified by that interested party. The trustee, in the case of a trust terminating pursuant to the terms of the trust or the trustee's resignation or removal, within a reasonable period of time following the expiration of the 120-day time period, shall distribute the assets as provided in the trust or to the successor trustee. If an interested party gives the trustee a written objection within the applicable 120-day time period, the trustee or the interested party may do either of the following:

(A) Submit the written objection to the court for resolution and charge the expense of commencing a proceeding to the trust; or

(B) Resolve the objection by a nonjudicial settlement agreement or other written agreement.

(2) Any agreement entered into pursuant to paragraph (1)(B) of this subsection may include a release, an indemnity clause, or both, on the part of the interested party against the trustee relating to the trust. Upon a resolution of an objection under this subsection, within a reasonable period of time, the trustee shall distribute the remaining trust assets as provided in the trust or to the successor trustee.

(f) An interested party to whom a report was sent under subsection (d)(1) of this section shall be deemed to have released the trustee and consented to and ratified all actions of the trustee if, within 120 days after the trustee mailed the report, the interested party:

(1) Does not submit a written objection to the trustee; or

(2) Submits a written statement to the trustee that the interested party does not object.

(g) When a trustee distributes assets of a terminating trust or to the successor trustee after complying with this section and having received no objections, each interested party who received notice and either consented or failed to object pursuant to this section is barred from bringing a claim against the trustee for breach of trust to the same extent and with the same preclusive effect as if the court had entered a final order approving the trustee's final account.

(h) §§ 19-1303.01 through 19-1303.04 shall apply to this section.

(i) Nothing in this section shall preclude a trustee from proceeding under § 19-1302.01 to have the trustee's accounts reviewed and settled by the court.

§ 19–1310.10. 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 the contract disclosed the 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.

§ 19–1310.11. Interest as general partner.

(a) 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 in the contract or in a statement previously filed pursuant to D.C. Official Code §§ 33-101.01 through 33-112.04 (Uniform Partnership Act of 1996), or D.C. Official Code §§ 33-201.01 through 33-211.07 (Uniform Limited Partnership Act of 1987).

(b) Except as otherwise provided in subsection (c) of this section, 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.

(c) 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.

§ 19–1310.12. 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.

(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.

§ 19–1310.13. 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) 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;

(7) The trust’s taxpayer identification number; and

(8) The manner of taking title to trust property.

(b) A certification of trust may be signed or otherwise authenticated by any trustee.

(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 which 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 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.

(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.