Sec. 10. (Liability to Third Persons)

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Terms Used In Indiana Code 30-4-3-10

  • Contract: A legal written agreement that becomes binding when signed.
  • Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Person: has the meaning set forth in IC 30-2-14-9. See Indiana Code 30-4-1-2
  • Property: includes personal and real property. See Indiana Code 1-1-4-5
  • Settlor: means a person who establishes a trust including the testator of a will under which a trust is created. See Indiana Code 30-4-1-2
  • Trust estate: means the trust property and the income derived from its use. See Indiana Code 30-4-1-2
  • Trustee: A person or institution holding and administering property in trust.
  • Trustee: has the meaning set forth in IC 30-2-14-13. See Indiana Code 30-4-1-2
     (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.

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