How Arizona Measures Trustee Liability
Trust administration carries real responsibility. When a trustee crosses the line, whether through mismanagement, self-dealing, or neglect, Arizona does not simply ask for an apology. The law puts a dollar figure on the damage and requires the trustee to make it right.
A trustee who commits a breach of trust is liable to the beneficiaries affected for the greater of either: 1. The amount required to restore the value of the trust property and trust distributions to what they would have been had the breach not occurred. 2. The profit the trustee made by reason of the breach.
A.R.S. § 14-11002(A)This is a straightforward formula. The court looks at two numbers: how much the trust lost and how much the trustee gained. Whichever is larger is what the trustee owes. That structure removes any incentive for a trustee to profit at the trust's expense, because they will always owe at least as much as they took.
When Multiple Trustees Share the Blame
If a trust has co-trustees and more than one of them is responsible for a breach, Arizona allows contribution between them. Each trustee can seek reimbursement from the others for their share of the liability.
A trustee is not entitled to contribution if the trustee was substantially more at fault than another trustee or if the trustee committed the breach of trust in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries.
A.R.S. § 14-11002(B)There is an important exception. A trustee who acted in bad faith, showed reckless indifference to the beneficiaries, or was substantially more at fault cannot shift liability to the others. And a trustee who personally benefited from the breach cannot claim contribution for the amount of that benefit. The law puts the heaviest burden on the worst actor.
