Fiduciary Duties Flashcards
Who is a fiduciary?
Someone who has undertaken to act for or on behalf or another giving rise to a relationship of trust and confidence.
What are the core fiduciary duties?
The fiduciary must not:
(1) Put themselves in a position where their interests conflict with the trust; and
(2) Make an unauthorised personal profit from the trust.
When can a trustee make a personal profit from the trust?
Trustee can keep personal profits if:
(1) it is authorised by the declaration of trust;
(2) all beneficiaries are aged 18 and over, know the full facts and consent; or
(3) it is authorised by a court order or by statutory provision
Say if a trustee purchases property from the trust and it was market value, is this ok?
No. It is a breach of the self-dealing rule.
The beneficiaries can apply for the transaction to be set-aside, but only if they apply within a reasonable amount of time.
What is the general rule regarding trustees paying themselves from the trust for their service as a trustee?
The general rule is that they cannot demand payment for their services.
When can a trustee be paid from the trust?
(a) if there is an express position in the trustees;
(b) if all beneficiaries are 18+ and agree to the remuneration (must be a fair amount);
(c) court orders that it is in the interests if the beneficiaries;
(d) where a trustee acting in a professional capacity has a reasonable remuneration approved by the other trustees in writing
When can a trustee accept a director’s salary as part of their commitment to the trust?
If they weren’t appointed by virtue of the trust.
Meaning, if the trust’s shares had not voted them into the position, they would have been appointed as a director regardless.
What happens if a trustee sets up a business that competes with a trust business?
The trustee will be liable to account to the trust for profits made by their competing business.
What happens if a trustee uses information that was properly meant for the trust to their benefit?
They must account to the trust for any profits made as a result of exploiting that information.
Would a trustee be in breach of trust if they were to exploit an opportunity, meant for the trust, that the trust wouldn’t have utilised anyways?
Yes, as it was an opportunity that rightly belonged to the trust.
What are the remedies available if the trustee breaches their fiduciary duties?
(1) A personal claim, brought in a reasonable time, for the personal profit;
(2) A proprietary claim for the trust property that was wrongly utilised
