Section 736.1011 of the Florida Trust Code places restrictions on the enforceability of a term in a trust that attempts to relieve a trustee of liability for a breach of trust. The restrictions are mandatory and may not be relaxed in the trust instrument. Refer to §736.0105(2)(u), F.S. Pursuant to §736.1011(1)(a), F.S., an exculpatory term may not relieve a trustee of liability for breaches committed in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries.
For example, in Barnett v. Barnett, 424 So. 2d 896 (Fla. 1st DCA 1982), the beneficiary contended that the trustee had under-distributed his share of the trust and breached its fiduciary duty by holding trust assets of stock in a falling market and by holding money in a non-interest checking account. The trial court dismissed the beneficiary’s complaint and held that the trustee acted as a prudent trustee. The appellate court affirmed, holding that under the exculpatory provision of the trust, the trustee could only have been liable for willful negligence, default, malfeasance or misfeasance, and not for honest errors of judgment made in good faith. The court reasoned that the trustee holding Barnett Bank stock in a declining market would not be in bad faith considering the tradition of holding Barnett Bank stock in the trust since its inception. Additionally, holding cash in a non-interest bearing checking account would not be in bad faith considering the probability of litigation expenses. Under the circumstances, the trial judge could conclude that the trustee acted as a reasonable, prudent trustee.
An exculpatory term may relieve a trustee of liability for his own negligence. For example, in Campbell v. Chitty, 2012 Fla. App. LEXIS 20868 (Fla. 1st DCA 12/5/12), the beneficiaries challenged the trial court’s final order directing the liquidation of trust assets and imposing monetary sanctions against trustee for breaching her fiduciary duty. However, the trust contained an indemnification clause that held the trustee harmless from any damages or liabilities for the trustee’s actions or omissions as long as the trustee’s actions or omissions were not negligent. In this case, the trial court never made a finding that the trustee’s actions were negligent. Thus, all of the damages, including attorney’s fees, imposed for breach of the trust were reversed. On remand, the trial court was directed to make factual findings as to whether or not the trustee’s actions rose to the level of negligence. The court may only award damages for the breach of the trust if it finds that the trustee’s actions were negligent. See also, Jones v. First Nat’l Bank 226 So. 2d 834 (Fla. 4th DCA 1969)( a trust instrument may contain exculpatory provisions whereby a trustee may, at least in circumstances involving ordinary negligence and honest errors of judgment, be relieved of liability for breach of trust) and Goyings v. The Jack and Ruth Eckerd Foundation, 403 So. 2d 1144 (Fla. 2nd DCA 1981) (to absolve an indemnitee from liability for his own negligence, an exculpatory clause must be clear and unequivocal).
 Indemnification shifts the entire loss from one who, although without active negligence or fault, has been obligated to pay. Stated differently, an indemnity right exists when one is left open to liability due to the wrongful acts of another. See, Wendt v. La Costa Beach Resort Condo. Assn., Inc. 14 So. 3d 1179 (Fla. 4th DCA 2009).