Accountability Beyond Breach
Most people think of trustee liability as something triggered by wrongdoing. This statute goes further. Trustees must account for any profit that arises from managing trust funds, even without bad faith or a breach. A trustee's fiduciary duties require them to serve the interests of the beneficiaries, not to enrich themselves from the position.
A trustee is accountable to an affected beneficiary for any profit made by the trustee arising from the administration of the trust, even absent a breach of trust.
A.R.S. § 14-11003(A)This does not mean trustees work for free. The statute carves out clear exceptions for reasonable compensation under A.R.S. 14-10708, fees allowed under A.R.S. 14-10802, standard business services the trustee customarily provides, and remuneration permitted under banking regulations.
Protection for Normal Market Losses
The flip side of this rule is just as important. If a trustee manages trust funds properly but investments lose value, the trustee is not personally liable for those losses.
Absent a breach of trust, a trustee is not liable to a beneficiary for a loss or depreciation in the value of trust property or for not having made a profit.
A.R.S. § 14-11003(B)Markets go up and down. Property values fluctuate. This provision protects trustees who carry out their fiduciary duties and make reasonable decisions that do not pan out. It draws a clear line: trustees must account for profits they gain, but they are not guarantors of investment performance.