Self-Dealing and Remedies

When a trustee engages in self-dealing, meaning they benefit personally from transactions involving trust property, those actions can be undone by the beneficiaries without needing to prove that the transactions were unfair. Beneficiaries have several options for remedies, including canceling the transaction, recovering any profits made by the trustee, or tracing the trust property into its current form.

A trustee sells trust property to themselves at a price below market value. The beneficiaries discover this and decide to set aside the sale, recovering the difference in value as a profit. The court allows them to do so without needing to assess whether the sale was fair.

Trustee self-dealing? Just say 'no' and reclaim what's yours!

Exams may present scenarios where students are tempted to analyze the fairness of the transaction instead of recognizing that self-dealing is automatically voidable. Students might overlook the range of remedies available to beneficiaries.

Questions often involve a fact pattern where a trustee engages in a transaction that benefits them personally, prompting students to identify the self-dealing and the appropriate remedies for beneficiaries.