Successor Trustees Owe a Duty of Loyalty
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When accepting the position of successor trustee, it is important to understand all of your responsibilities in advance. If you are unable or unwilling to take on this important role, it is better to decline the appointment rather than putting yourself at risk for potential liability. One area where a trustee can get into trouble is with regard to a successor trustee’s duty of loyalty.
10 Examples of the Breach of Loyalty by a Trustee
As trustee, a duty of loyalty is owed to the beneficiaries of the trust. When this duty is broken, there has been a breach of loyalty. The following are 10 examples of such a breach:
- First of all, buying trust property
- Also, leasing trust property to yourself
- Furthermore, buying trust property at a sale that was forced by a third party
- Selling your property to the trust
- If you are trustee of multiple trusts, selling as trustee of one trust to yourself as trustee of another trust
- As trustee under a lease, taking renewal of the lease for yourself
- Additionally, hiring yourself on behalf of the trust to do work for the trust
- Also, If you are the trustee of corporate stock, voting for yourself as director or officer of the corporation
- If you are the trustee and the trust has business interests, engaging in a competing business on your own behalf
- Lastly, accepting gifts from parties that do business with or on behalf of the trust
In general, it is important for successor trustees to avoid involvement in transactions that benefit the trustee at the expense of the trust. An experienced attorney can help walk you through the trust administration process in a way that helps you to avoid litigation. We encourage you to learn more by checking out our client testimonials today.