Also known as: personal fault · personal liability
Written by attorneys · grounded in primary & secondary sources — see below
Liability imposed on a trustee or personal representative for torts committed during administration or for obligations arising from ownership or control of trust or estate property only when the fiduciary's own conduct or knowledge satisfies the fault standard.
Preston Pratt conveyed mortgaged land to Prism Analytics. The mortgagee later executed an express written release of Pratt from the underlying note. Because the release discharged Pratt without any finding of personal fault on his part, the mortgagee could not pursue him for a deficiency after foreclosure.
Pierre Poulin formed an undercapitalized shell corporation that ignored corporate formalities and held no assets. When the corporation defaulted on obligations, creditors proved Poulin used the entity merely to avoid personal liability. The court disregarded the corporate form and held Poulin personally liable because his conduct met the alter-ego and injustice prongs.
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Parker Phillips served as trustee of a trust that owned contaminated land. After the trust sold the property, the buyer incurred cleanup costs under environmental law. Because Phillips had taken no personal action causing the contamination and had followed all trust procedures, the court held he was not personally at fault and therefore not personally liable.
Portia Price acted as personal representative of an estate that owned rental property. A tenant was injured when a handrail collapsed. The court found the collapse resulted from ordinary wear that Price had no reason to know about and had not personally created. Because Price was not personally at fault, she incurred no individual liability for the tenant's claim.
A trustee is personally liable for such torts only if the trustee is personally at fault. The trust estate itself remains reachable by the tort victim even when the trustee escapes personal liability.
No. A limited partner remains shielded from personal liability for partnership obligations even when participating in management or failing to observe formalities, unless other law imposes liability based on the partner's specific conduct.
Creditors must satisfy a two-prong test: the corporation was the alter ego of the shareholder, and respecting the corporate form would sanction fraud or promote injustice. Undercapitalization combined with disregard of formalities can support that finding.
Yes. An express release from the mortgagee discharges the transferor from personal liability on the secured obligation regardless of any suretyship defenses that might otherwise apply.
…charitable foundation. It was not until later in the litigation that he altered his position in an attempt to shed himself of personal liability. It is recognized that Levine was neither an art expert nor an experienced fiduciary but he was an educated man who, despite his educational background and his position as a college…