A person who intermeddles with, and assumes the management of, trust property becomes a trustee by construction. The person is said to be a trustee de son tort. A de facto trustee differs from a trustee de son tort in that the former assumes the office of trustee under a color of right or title. Where one without authority undertakes to administer entrusted property, he must carry all the risks, and make good all the losses, and have none of the profits. Trustees de son tort are subject to the same rules and remedies as trustees who have been duly appointed. This goes for de facto trustees as well.

A trusteeship de son tort has been described by English commentators as a type of institutional constructive trust. Institutional constructive trusts are trusts which arise from some preexisting fiduciary relationship before and apart from any breach of trust or duty, whereas remedial constructive trusts are imposed where no fiduciary relationship previously existed.

Assume a trustee in breach of trust transfers an entrusted parcel of real estate to a third party who knows of the breach. Assume, also, that the third party then voluntarily proceeds to make improvements on the property, e.g., by landscaping the front yard. Is the third party entitled to be reimbursed from the trust estate for the costs of those improvements? Probably not. As is true in the law of contracts, a person is not entitled to recover for a benefit conferred if in conferring the benefit the person acted as an officious intermeddler. The third party knew the parcel belonged to others. On the other hand, payments made in satisfaction of obligations that run with the property, e.g., real estate taxes, probably are reimbursable. For a general discussion of the rights of the beneficiary as against BFPs and non-BFPs of the trust property, the reader is referred to §5.4.2 of Loring and Rounds: A Trustee’s Handbook (the “Handbook”).

There is a general principle of equity that a third party who knowingly participates in a breach of trust is liable to the beneficiaries for any injury to the trust estate that is attributable to his actions. This is a topic that is taken up in §7.2.9 of the Handbook, which section is reproduced in its entirety in the appendix immediately below. The de facto trustee concept is, for all intents and purposes, little more than a specific application of this general equitable principle, at least one court has so determined. See Bird v. Carl C. Anderson, No. 03-21-00140-CV, 2021 Tex. App. LEXIS 5036 (Tex. App. – Austin June 24, 2021, no pet. history).