Which Expenses Qualify for Reimbursement
Trustees regularly incur expenses on behalf of the trust: filing fees, tax preparation costs, property maintenance, insurance premiums, professional advisor fees, and similar charges. Arizona law makes clear that these properly incurred expenses are reimbursable from the trust property, with reasonable interest.
A trustee is entitled to be reimbursed out of the trust property, with reasonable interest, for: 1. Expenses that were properly incurred in the administration of the trust. 2. To the extent necessary to prevent unjust enrichment of the trust, expenses that were not properly incurred in the administration of the trust.
A.R.S. § 14-10709(A)The second category is notable. Even when an expense was not strictly proper, the trustee may still recover it if denying reimbursement would leave the trust unjustly enriched. For example, if a trustee pays for emergency repairs without following every required procedure, the trust still benefited from the work. The law recognizes that reality.
When a Trustee Advances Personal Funds
Sometimes a trustee needs to spend personal money to protect trust property, whether to cover an urgent tax payment, prevent a foreclosure, or handle an emergency. Arizona gives that trustee more than just a right to be repaid.
An advance by the trustee of money for the protection of the trust gives rise to a lien against trust property to secure reimbursement with reasonable interest.
A.R.S. § 14-10709(B)The lien means the trustee's claim for reimbursement is secured by the trust assets themselves. This provides real protection for trustees who step up financially to safeguard the trust, ensuring they are not left out of pocket while waiting for the trust to settle its debts.
