Modules 9 & 10: Trust Fiduciary Administration, Alienation, and Modification

Question 1

Most important piece of the duty of loyalty

Answer 1

No self dealing
this is an absolute duty
there is a NO FURTHER INQUIRY rule when looking into self dealing issues

if there is self-dealing found, there is NO EXCUSE

EVEN WHERE IT BENEFITS THE TRUST

Question 2

Duty of loyalty against conflicts of interest

Answer 2

Avoiding injury or preference to any outside individual or institution when working in the name of the trust

Question 3

Duty of prudence in discretionary trusts

Answer 3

mandatory trust: must distribute all income

discretionary trust: trustee has discretion with income, principal, or both
- spray or sprinkle trust: trustee has discretion to distribute amongst beneficiaries
- support trust: standard for support of loved ones according to lifestyle

Question 4

Exculpatory clause

Answer 4

Named trustee is exonerated from any issue that arises from a breach of duty UNLESS there is bad faith, reckless indifference, or intentional conduct on the part of the trustee