Probate & Trust Law Section Conference Manual ... - Minnesota CLE

judgment, and that, by accepting the proceeds from the stock redemption,
they did not ratify the breach of trust.
3. Hastings v. PNC Bank, 54 A.3d 714 (Md. 2012). Trustee did not
breach fiduciary duty by requesting beneficiaries to sign release and
indemnity agreement. Trustee began process of distributing trust assets
after current beneficiary’s death and after estate taxes were paid and it
requested that remainder beneficiaries sign a release and indemnification
agreement for its actions. Remainder beneficiaries argued that the
trustee’s requirement that the remainder beneficiaries sign a release as a
condition precedent violated trust law. The Court held that the trustee did
not breach its duties simply by asking the remainder beneficiaries to sign a
release in lieu of going to court to have its actions approved. The trustee
was entitled to some indemnity for its expenses and was entitled to be
protected from liability.
4. In the Matter of Jastrzebski, 948 N.Y.S.2d 689 (N.Y. App. Div. 2012).
No matter how broad an exculpatory clause is, a trustee may be liable
if the trustee acted in bad faith or with reckless indifference. The
exculpatory clause in the trust provided that fiduciaries were exonerated
from acting with undivided loyalty and permitted them to act on behalf of
the trust with respect to entities in which the fiduciaries had an interest.
The trustee sold the life insurance policy because it lacked funds to pay
the premiums; however, the beneficiaries claimed that relinquishing the
policy was an act of self-dealing. The Court held that the trustee’s
conduct was not subject to an undivided duty of loyalty. The matter was
remanded to determine whether the trustee acted in good faith or if the
trustee acted with reckless indifference.
5. Regions Bank v. Lowrey, 101 So.3d 210 (Ala. 2012). Trustee did not
breach fiduciary duty by failing to diversify out of timberland holding
because it acted in good faith in relying on its assumption that the
beneficiaries wanted the asset to be retained. The trust’s primary asset
was 20,000 acres of timberland. In 1993, the trustee obtained a court
order which authorized the retention of the asset so long as the trustee
considered the retention to be in the “best interests of the trust.” In 2004,
Hurricane Ivan caused severe wind damage and destruction of the
timberland owned by the trust, and the beneficiaries sued the trustee for
breach of fiduciary duty for failing to diversify and for failing to obtain
insurance against loss. The Court held that the trustee acted in good faith
in its retention of the timberland, relying on the trustee’s reasonable
assumption that the beneficiaries wished for the timberland to be retained
and that there were significant income tax reasons for not selling the
property. The retention was also consistent with the donor’s intention.
The Court also found that the trustee did not breach its fiduciary duty for
failing to obtain casualty loss insurance when it had investigated
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