Monday, August 6, 2012
Ilene S. Cooper (Partner at the law firm of Farrell Fritz, P.C.) and Robert M. Harper (Associate at Farrell Fritz, P.C.) recently published their article entitled, Incomplete Protection: Exoneration Clauses in New York Trusts and Powers of Attorney, 28 Touro L. Rev. 379 (2012). The opening paragraph of the article is below:
Exoneration clauses excuse fiduciaries, most notably executors and trustees, from liability for the failure to exercise reasonable care. Although exoneration clauses in testamentary instruments have been deemed void as against public policy, pursuant to New York Estates, Powers and Trusts Law (“EPTL”) section 11-1.17, there is no analogous statutory prohibition concerning the enforceability of similar provisions in inter vivos trusts and powers of attorney. The absence of such statutory guidance has left courts to reach divergent views concerning the enforceability of exoneration clauses in lifetime trust instruments. In order to create uniformity in terms of the duties that fiduciaries (whether they be executors, trustees of testamentary trusts, trustees of inter vivos trusts, or attorneys-in-fact) owe to the individuals whose interests they protect, the EPTL and the New York General Obligations Law (“GOL”) should be amended to provide that exoneration clauses in inter vivos trust instruments and powers of attorney are void as against public policy.