Sole interest or best interest: Equity's traditional default loyalty principle is under attack

Charles E. Rounds, Jr.

Some in academia have been advocating that trustees generally be held to a best-interest-of-beneficiary default standard rather than the traditional and more rigorous sole-interest-of-beneficiary default standard. See Loring and Rounds: A Trustee’s Handbook §6.1.3 [pages 464-466 of the 2016 Edition] (the no-further–inquiry-rule). In the agent-fiduciary space, unlike the trustee-fiduciary space, those who would water down the fiduciary principle have been scoring some direct hits. See, e.g., Uniform Power of Attorney Act § 114(d): “An agent that acts with care, competence, and diligence for the best interest of the principal is not liable solely because the agent also benefits from the act or has an individual or conflicting interest in relation to the property or affairs of the principal.”) The portion of §6.1.3 of the Handbook dealing with the no-further-inquiry-rule generally is reproduced in its entirety below.

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© Charles E. Rounds, Jr., Suffolk University Law School | Attorney Advertising

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Charles E. Rounds, Jr.

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