Trust 12 - Fiduciary relationship Flashcards
1
Q
What types of duties do trustees owe?
A
- Trustee duties (e.g. comply with trust terms, reasonable care and skill)
- Fiduciary duties (no conflict, benefit)
2
Q
What are the 2 fiduciary duties trustees owe?
A
- No Conflict
- No Profit
3
Q
What is the no-profit rule and remedies for breach?
A
Won’t be able to retain profit: either
- account for profits (personal claim) or
- constructive trust imposed (proprietary claim)
4
Q
What is self-dealing and its effect?
A
- Trustees shouldn’t purchase trust property from trust or sell assets to trust as it’s breach of no-conflict rule
- Transaction = voidable
- For company in which they hold shares, if they have a controlling shareholding, can be seen as self-dealing, if not, not self-dealing but still breach of no conflict
5
Q
how can a trustee avoid liability for fair-dealing?
A
Fair Dealing = trustee buying beneficial interest off beneficiary
Voidable unless:
- full disclosure
- acted honestly and fairly
- did not take advantage of B
- get fully informed consent from principals (settlor)
6
Q
What are the consequences if breach of no-conflict rule?
A
Transaction = voidable
If it causes loss, can be sued personally
If principal profits from breach, can’t obtain a remedy, but if fiduciary also profits, they can recover this