Those who would dilute the trustee's duty of undivided loyalty

Charles E. Rounds, Jr.
Contact

As a general rule, the trustee has a duty to act solely in the interests of the beneficiaries. See, for example, UTC § 802(a), as well as the discussion of the no-further-inquiry rule in the Appendix below. That having been said, UTC § 802(g) provides that “[i]n voting shares of stock or in exercising powers of control over similar interests in other forms of enterprise, the trustee shall act in the best interests of the beneficiaries.” Why the downgrade, particularly when the corporation is wholly owned? What is the policy rationale for diluting at the intersection of trust and corporate law the loyalty principle via an exemption from the no-further-inquiry rule? Whether the trustee as corporate manager should be governed by the business judgment rule rather than the prudent investor rule is a separate issue involving levels of acceptable risk. For a general discussion of whether a trustee’s conduct as a matter of public policy should be subject to a sole-interests-of-the-beneficiary default standard, or the less rigorous best-interests-of-the-beneficiary default standard, see Loring and Rounds: A Trustee’s Handbook §6.1.3, pages 471-473 of the 2018 Edition, which pages are reproduced in the Appendix below.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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

Written by:

Charles E. Rounds, Jr.
Contact
more
less

Suffolk University Law School on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.