Transactions between a trustee and the trust are voidable without proof of unfairness under the no-further-inquiry rule. Exceptions arise from trust authorization, court approval, or informed beneficiary consent.
Indirect self-dealing through affiliates is included.
Alternative Names:
Trustee Self-Dealing|Self-Interested Transaction
Why it Matters?
Indirect transactions through entities the trustee controls or family members receive the same treatment, which reaches arrangements structured to avoid the appearance of direct dealing. Corporate trustees investing trust assets in proprietary funds face the analysis, and statutory exceptions permit it in many states subject to fee disclosure. Documenting authorization before the transaction rather than seeking ratification afterward is materially stronger.
Frequently Confused with
Related terms
Frequently asked questions
Does the rule reach indirect transactions?
What about proprietary fund investments?
