Fiduciary & Trust Section # 10 Ethics

Question 1

2 duties owed by trustee

Answer 1

1. Duty of loyalty to trust beneficiaries to act solely in their best interests
2. Duty of impartiality in dealing with beneficiaries

Question 2

Duty of loyalty

Answer 2

Trustee must administer trust solely in the best interest of beneficiaries

Trustee must deal fairly and communicate all material facts to beneficiaries

Trustee must exclude all personal interests and cannot consider interests of third parties when acting in fiduciary capacity

Question 3

Under what circumstances can trustee self-deal?

Answer 3

1. Authorized by just agreement
2. Authorized by state statute
3. Authorized by court order
4. Authorized by all beneficiaries

Question 4

Exception to self-dealing

Answer 4

Common trust fund

Question 5

Disloyalty through subterfuge

Answer 5

Deceit - third party buys trust property with understanding that it will be resold to trustee

Question 6

Trust opportunity doctrine

Answer 6

Trustee cannot acquire for itself property they have a duty to acquire for the trust

Question 7

Conflict of interest discovery

Answer 7

Remove conflict of interest

Resign as trustee

Question 8

Duty of impartiality

Answer 8

Trustee must act impartially with respect to each beneficiary

Trustee must balance competing interests of different beneficiaries in a fair and reasonable manner

Question 9

“Priority” beneficiaries

Answer 9

Restatement of trusts → surviving spouse needs take priority over interests of other beneficiaries

Question 10

“Priority” beneficiaries

Answer 10

Restatement of trusts → surviving spouse needs take priority over interests of other beneficiaries

Question 11

Release agreement

Answer 11

Does not limit liability for trustee if “induced by improper conduct of trustee”