Trustee liabilities

We know that personal liability causes worry for existing and potential trustees, even though it is rare for a trustee to suffer actual financial loss.

When charities run into problems, trustees may be personally liable for any resulting debts or losses. Until recently, the Charity Commission was unable to give trustees any firm assurance that they will not be held liable, as only the courts could give this assurance. However, trustees are now able to apply to the Commission as well as the courts for relief from personal liability.

The power applies only where trustees have acted honestly and reasonably and ought fairly to be excused. The Commission will still take deliberate breaches of trust very seriously.

Trustees are also able to buy trustee indemnity insurance and most of the old obstacles to this have now been removed. Trustees may pay the premiums with the charity’s money, subject to certain limitations and conditions.