There are additional fiduciary duties in play when there are cotrustees of a trust. If cotrustees are serving, the default rule is that they act by a majority decision. Section 456.7-703.1, RSMo. A cotrustee is under an obligation to participate in the performance of a trustee’s function — unless the trustee is absent, ill, legally…
Legal Articles
Trusts: Damages without a Breach
Because of the high fiduciary standards applied to trustees, a beneficiary may still nevertheless hold a trustee liable for damages even when the trustee has not committed a breach of trust. Specifically, a trustee is accountable to an affected beneficiary for any profit made by the trustee arising from the administration, even absent a breach….
Breach of Trust: Causation and Damages
To succeed on a breach of trust claim, a plaintiff must prove (1) the existence of a fiduciary duty, (2) breach of the duty, (3) causation and (4) harm. Brown v. Brown 530 S.W.3d 35, 41 (Mo. Ct. App. 2017). Causation and damages cannot rest upon “guesswork, conjecture or speculation beyond inferences that can reasonably…
Attorney Fees, Trust Litigation, Breach of Trust
Attorney fees are not necessarily awarded to every successful litigant, and they may only be awarded when they are provided for by statute or contract. Berry v. Volkswagen Group of America, Inc., 397 S.W.3d 425, 431 (Mo. 2013). Section 456.10-1004, RSMo generally permits a court to award attorney fees to be paid by any party…
Consent/Ratification to Breach of Trust, Minors
Under certain circumstances, a trust beneficiary can consent to a trustee’s conduct that would otherwise constitute a breach of fiduciary duty. For a consent to be proper, the beneficiary must know of all material facts relating to the breach. Section 456.10-1009(2), RSMo. Missouri law, furthermore, imposes specific limitations on consent or ratification on behalf of…
Trust Settlor
A “settlor” — previously and sometimes referred to as a “grantor” or “trustor” — is a person who creates a trust. Most trusts are revocable living trusts in which the settlor, during his, her or their lifetime, serve as trustee and principal beneficiary. Even when the settlor is living and not serving as trustee, the…
Trustee: Personal Liability
In breach of trust and/or breach of fiduciary suits, whether a trustee is personally liable often comes up. Section 456.10-1010, RSMo provides some points of clarification on the matter: (1) Unless provided otherwise in a contract, a trustee is not personally liable on a contract if the trustee discloses the trustee/fiduciary capacity in the contract….
Trustee Duty to Report and Inform
As part of a trustee’s fiduciary duties, there is an important obligation to keep beneficiaries ” “reasonably informed about the administration of the trust and of material facts necessary for them to protect their interests.” § 456.8-813, RSMo. This is flexible language and greatly depends on the facts of a particular section. However, the official…
Trusts: Duty of Loyalty
A trustee has a fiduciary duty of loyalty to act in the best interests of the trust’s beneficiaries. While the Settlor (i.e., trust-maker) is alive and has capacity to revoke the trust, the duties of the trustee are owed exclusively to the Settlor. Section 456.6-603, RSMo. There is typically a shift in these duties when…
Trust Law versus Corporate Law, Controlling Duties
When a trust owns corporate shares, do corporate fiduciary obligations or trustee obligations prevail? The answer is that generally a trustee’s obligations take priority. Upon incorporation of trust assets, the corporation becomes the alter ego of the trustees and the trustee’s acts are determined in the light of the trust. Weldon Revocable Trust v. Weldon, 231 S.W.3d 158, 171…