Voidable Transactions, Trustee Conflicts of Interests, Duty of Loyalty
A trustee owes a fiduciary duty to a beneficiary. Therefore, a trustee is generally not permitted to enter into any transaction that is a conflict between the trustee’s personal interests and fiduciary responsibilities, unless (1) the transaction was authorized by the trust, (2) approved by the Court, (3) consented to or ratified by the beneficiaries, or (4) the transaction involves a contract entered into or claim acquired by the trustee before the person became or contemplated becoming trustee. See Section 456.8-802.2, RSMo.
Because a trustee’s duty of loyalty is such an important part of the trustee’s responsibilities, transactions with a (1) trustee’s spouse, (2) trustee’s descendants, siblings, parents, or their spouses, (3) an agent or attorney of the trustee, or (4) a corporation or other person or enterprise in which the trustee, or a person that owns a significant interest in the trustee, has an interest that might affect the trustee’s best judgment are presumed to be a breach of the duty of loyalty. A breach of the duty of loyalty is a breach of trust, which may merit damages or trustee removal depending upon the circumstances.
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