- A trustee is generally not liable for a co-trustee's breach unless their own acts or omissions took part in it.
- The court may relieve a trustee who acted honestly and reasonably and ought fairly to be excused, and a will cannot override that section.
- Careful conduct, supervising agents and asking the court for directions are the main practical protections, and where there are three or more trustees, a majority may also remove an uncooperative co-trustee.
If you act as a trustee with others, whether under a will or another trust, you may worry that a co-trustee's mistake could become your problem. That worry is common, especially when one trustee handles most of the day-to-day work.
Alberta's current Trustee Act (SA 2022, c T-8.1) sets out when one trustee answers for another, how losses can be shared, and when a court can excuse a trustee. The Act came into force on February 1, 2023 and replaced the former Act. This article explains the main rules in plain terms.
This article covers the law of Alberta.
The starting rule: you answer for your own conduct
A trustee is not liable for a co-trustee's breach unless the trustee took part in it through their own acts or omissions. An omission can count, so quietly standing by or ignoring warning signs may put you on the wrong side of this rule. Whether your conduct amounts to taking part depends on the facts.
Leaving the role does not wipe the slate clean. A former trustee remains liable for breaches committed while in office.
Sharing the loss: contribution and indemnity
Trustees may claim contribution and indemnity from one another, and the court may order beneficiaries who instigated, requested or consented to a breach to contribute or indemnify the trustee. The court determines the amount each trustee must pay to make good the loss to the trust.
- Trustees who are found responsible can look to each other to share the cost.
- A beneficiary who pushed for or agreed to the breach may be ordered to contribute.
- The court determines the amount each trustee must pay to make good the loss to the trust.
Relief and exemption clauses
The court may relieve a trustee wholly or partly from personal liability for a breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused. A beneficiary, trustee or secured party may apply.
An exemption clause in a trust instrument generally relieves a trustee of liability according to its terms. The court may declare it ineffective where the trustee's conduct was so unreasonable, irresponsible or incompetent that the trustee ought not to be relieved.
A will generally prevails over a contrary provision of the Trustee Act, unless the Act provides otherwise, and s. 84 is one rule that prevails over contrary trust-instrument provisions. This does not cancel exemption clauses, because s. 84 itself lets an exemption clause relieve a trustee according to its terms, subject to the court's power to declare it ineffective.
Practical protections while you serve
| Protection | What the Act says |
|---|---|
| Standard of care | Subject to s. 35, use the care, diligence and skill a person of ordinary prudence would use with another person's property; a trustee with specialized or professional skill is held to a higher standard |
| Supervising agents | Select the agent personally, be satisfied of suitability, set the terms and supervise reasonably and prudently |
| Directions | A trustee may apply to the court for directions, and following them discharges the duty unless obtained by fraud, wilful concealment or misrepresentation |
| Removal | With three or more trustees, a majority may remove a trustee who fails to show ordinary prudence, consistently ignores communications or won't cooperate, if that harms administration |
When a majority of three or more trustees removes a trustee under section 21 of the Trustee Act, the removal takes effect 15 days after delivery unless the trustee requests a meeting.
What to do next
- Keep written records of decisions, meetings and who did what.
- Read statements and reports yourself rather than relying on a co-trustee's word.
- Raise concerns in writing as soon as you notice them.
- Check your will or trust deed for any exemption clause.
- Consider asking the court for directions where the path is unclear.
- Speak with a lawyer early if you suspect a breach, since time limits and facts matter.
Frequently asked questions
Can I be blamed if my co-trustee made a bad decision without telling me?
Generally a trustee is not liable for a co-trustee's breach unless their own acts or omissions took part in it. Whether failing to check or ask questions counts as an omission depends on the facts, so get advice if this is your situation.
If I resign, am I free of responsibility?
No. A former trustee remains liable for breaches committed while in office.
Can a will limit a trustee's liability?
An exemption clause generally works according to its terms, but the court may declare it ineffective where the trustee's conduct was so unreasonable, irresponsible or incompetent that they ought not to be relieved. Section 84 also prevails over contrary trust-instrument provisions.
Can I get my share back from a co-trustee who caused the loss?
Trustees may claim contribution and indemnity from one another, and the court determines the amount each must pay to make good the loss. A beneficiary who instigated, requested or consented to the breach may also be ordered to contribute.
Sources
- Trustee Act, SA 2022, c T-8.1, ss. 104-105 (King's Printer) — kings-printer.alberta.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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