The duty prohibits self-dealing, conflicts of interest, and personal benefit from trust transactions. Self-dealing transactions are voidable without proof of unfairness under the no-further-inquiry rule.
Trust terms or consent may authorize otherwise prohibited transactions.
Alternative Names:
Trustee Loyalty|Loyalty Duty (Trust)
Why it Matters?
The no-further-inquiry rule makes self-dealing voidable regardless of fairness, which means a trustee who purchased trust property at a demonstrably fair price still faces avoidance absent authorization, and defending on fairness grounds fails. Authorization must come from the trust instrument, court approval, or informed beneficiary consent obtained before the transaction. Retroactive consent after disclosure is substantially weaker.
Frequently Confused with
Related terms
Frequently asked questions
Does fairness defend a self-dealing transaction?
What authorization suffices?
