Section 2.41 Self-Dealing—The 18 Negative Duties

• Library: Trusts and Powers 2013 Supp

c. (§2.41) Self-Dealing—The 18 Negative Duties

The duty of loyalty, the fundamental general duty of all trustees to administer trusts solely in the interests of beneficiaries, Restatement (Third) of Trusts, Prudent Investor Rule § 170(1) (1992), § 456.8-802.1, RSMo Supp. 2005, is coupled with a number of very specific negative prohibitions against self-dealing, violation of any of which can be grounds for removal of the offending trustee. Many of these negative duties are set out in the following:

· Comments to Restatement (Second) of Trusts § 170 (1959)

· Comments to Restatement (Third) of Trusts, Prudent Investor Rule §§ 170 and 227

· The corresponding subparagraphs of 12 C.F.R. §§ 9.10, 9.12, and 9.18

· The corresponding subparagraphs of 12 U.S.C. § 92a(d), applicable to national banks and trust companies

Trust officers and lawyers representing trustees and trust beneficiaries should be familiar with all of them.

The summary below of the self-dealing prohibitions may be useful as a starting point to avoid trustee removal or penalty for self-dealing. These are prohibitions against the following:

· Sale of trust property to the trustee individually, Restatement (Second) of Trusts § 206 cmt. b

· Purchase of trust property for the trustee...