Remedies of Beneficiaries

Question 1

If there are money damages, B may be entitled to one or more of the following damages:

Answer 1

1. lost profits
2. depreciation in value of trust property
3. profits earned by trustee

Question 2

B may have his choice among these remedies for self dealing:

Answer 2

1. affirm transaction - if trust profited
2. set aside transaction - if trust lost
3. trace profits - if trustee profited.

Question 3

To remove a trustee, absent instructions in the trust instrument, the Bs need to go to court and assert one of the following (8):

Answer 3

1. incapacity
2. unfit (convicted of crime, chemically dependent)
3. serious breach of duty
4. serious conflict of interest
5. insolvency
6. extreme hostility that interferes with trust administration
7. refusal to post any required bond
8. refusal to account

Courts will consider settlor’s intent.

Question 4

What are a trustee’s contract liability to third parties?

Answer 4

general rule is trustee is liable.

Exception: provision in K excluding trustee’s personal liability; signing ‘as trustee’ is prima facie evidence of an intent to exclude personal liability

**if property entered into for the trust and trustee not in breach, trustee entitled to indemnification or reimbursement from trust property

Question 5

What is a trustee’s tort liability to third parties?

Answer 5

General rule: liable.

can get indemnified or reimbursed if:

• trustee not personally t fault
• tort is normal incident of activity