Also known as: absence of a breach of trust · no breach of trust
Written by attorneys · grounded in primary & secondary sources — see below
A condition under which a fiduciary incurs no liability for transferring appointive property. The condition exists when the transfer is made to a permissible appointee and the fiduciary lacks actual knowledge or reason to know that the appointment violates the donee's scope of authority.
Anchor Bank serves as custodian for a family investment fund. The investor's advisor directs the bank to transfer a large interest to the investor's sister, a member of the permitted class. The bank confirms the recipient's status and executes the transfer without any indication that the advisor exceeded her authority. The other siblings later sue the bank, but it faces no liability because the transfer satisfied the requirements for absence of breach of trust.
Ava Adebayo and her brothers serve as trustees of a family trust with their sister as beneficiary. The brothers complete several transactions involving trust assets after reviewing the governing instrument. The sister challenges the transactions as breaches, but the court finds no breach of trust because the trustees acted within the instrument's terms and without disloyalty or improper purpose.
Select any source to read its text and confirm it supports the definition.
A fiduciary avoids liability when it transfers property to a permissible appointee and lacks actual knowledge or reason to know that the appointment exceeds the donee's authority. The rule protects the fiduciary from having to investigate the donee's motives or the fairness of the allocation among class members.
Supporting sources
Unverified complaints about favoritism or disproportionate allocations do not by themselves give a fiduciary reason to know that an appointment violates the donee's scope of authority. The fiduciary may still rely on a facially valid direction to a permissible appointee.
Supporting sources
A permissible appointee falls within the class expressly authorized by the governing instrument. Transferring to such a person triggers the protection of absence of breach of trust unless the fiduciary knows or has reason to know the appointment itself exceeds the donee's authority.
Supporting sources