Good Faith Dealing With a Trustee
Banks, title companies, financial advisors, and everyday people regularly interact with trustees. They process transactions, transfer property, and accept instructions from someone acting on behalf of a trust. Arizona law protects these third parties as long as they act in good faith.
A person other than a beneficiary who in good faith assists a trustee or who in good faith and for value deals with a trustee, without knowledge that the trustee is exceeding or improperly exercising the trustee's powers, is protected from liability as if the trustee properly exercised the power.
A.R.S. § 14-11012(A)This means a bank that processes a trustee's transaction does not need to verify every detail of the trust document. If they act without actual knowledge that something is wrong, they are protected.
No Duty to Investigate
Arizona goes further by stating that third parties are not required to inquire into the extent of the trustee's powers or whether those powers are being used properly. A person who delivers assets to a trustee does not need to ensure those assets are applied correctly.
The same protection covers people who deal with a former trustee without knowing the trusteeship has ended. If a bank continues to process transactions for a trustee who has been replaced, and the bank had no knowledge of the change, the bank is protected.
For families managing trust administration, this statute explains why institutions often accept a certification of trust rather than demanding the entire trust document. The law is designed to keep trust transactions moving smoothly by protecting those who participate in good faith.
