Trustee Duties (Loyalty · Prudence · Diversification)
Trusts · Lesson 02
Trustee Duties (Loyalty · Prudence · Diversification)
這一課問的是：受託人是否違反忠誠、審慎、或分散義務？
ActorActObjectStandardConsequence
Visual Scene · the picture in your head
Issue. Has the trustee breached duties of loyalty, prudence, or diversification?
這一課問的是：受託人是否違反忠誠、審慎、或分散義務？
Core Terminology · 7 must-know
Tap a card to flip and reveal the meaning.
duty of loyalty
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Trustee must act solely in beneficiary's interest.
忠誠義務。
duty of prudence
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Trustee must act with reasonable care and skill.
審慎義務。
duty to diversify
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Trustee must diversify investments unless circumstances clearly favor otherwise.
分散義務。
self-dealing
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Trustee may not transact with trust for personal benefit.
自我交易。
commingling
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Trustee may not mix trust assets with personal.
混同。
no further inquiry
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Self-dealing voidable regardless of fairness.
無進一步調查。
informed consent
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Beneficiary may consent after full disclosure.
知情同意。
Issue · what this lesson is really about
Has the trustee breached duties of loyalty, prudence, or diversification?
這一課問的是：受託人是否違反忠誠、審慎、或分散義務？
Trigger words & phrases that should flag this issue:
self-dealingconflictprudent investordiversifycommingle
Expression Bank · how lawyers actually say it
Six function → sentence patterns. Use these in essay applications.
| Function | English sentence | 中文 |
|---|---|---|
| Apply loyalty | Trustee owes undivided loyalty; self-dealing transactions are voidable. | 受託人負完整忠誠；自我交易可撤銷。 |
| Apply prudence | Trustee must act with reasonable care, skill, and caution. | 須以合理注意、技巧、謹慎行事。 |
| Apply diversification | Trustee generally must diversify unless circumstances clearly favor otherwise. | 通常須分散，除非情況明顯反之。 |
| Apply commingling | Trustee must keep trust property separate from personal. | 信託財產與個人財產須分開。 |
Rule Sentence · the workhorse
A trustee owes the beneficiaries duties of loyalty (no self-dealing), prudence (reasonable care, skill, and caution), and diversification (spreading investment risk); breach of these duties exposes the trustee to personal liability and the transaction to voidance.
Sentence Anatomy · 5 roles, 5 colors
Every rule sentence breaks into five visual roles.
Actor 行為人trustee受託人
Act 行為managing trust管理信託
Object 對象trust property信託財產
Standard 法律標準loyalty + prudence + diversification忠誠 + 審慎 + 分散
Consequence 後果liability and voidance責任與撤銷
Casebook Snapshot · a real American case
Hartman v. Hartle
Holding. A trustee who purchases trust property — even at a fair price through an arms-length sale — engages in self-dealing voidable at the beneficiary's election; the no-further-inquiry rule bars defenses based on fairness or absence of harm.
Why it matters. Hartman shows the rigor of the loyalty duty: self-dealing is voidable per se, no defense from fairness or even benefit to the trust.
Hartman：自我交易絕對禁止 — 公平與否不可作為抗辯。
Common Mistakes · what trips students
✗ self-dealing 若公平即可。
✓ Self-dealing voidable regardless of fairness (no-further-inquiry rule).
無關公平 — 仍可撤銷。
✗ diversification 為 universal duty。
✓ Subject to settlor override and circumstances.
可由設立人排除或情況不同。
Mini IRAC · build the Application
Issue. Has the trustee breached the duty of loyalty by purchasing trust real estate at market value for the trustee's own account?
Rule. A trustee owes the duty of undivided loyalty; self-dealing transactions are voidable regardless of fairness under the no-further-inquiry rule.
Application (model). The trustee purchased trust real estate at fair market value for personal account. Because the duty of loyalty bars self-dealing regardless of the transaction's fairness, the fact that the trustee bought trust property for himself — even at full market value — means the no-further-inquiry rule renders the transaction voidable.
Pick the right element for each blank:
g1.
g2.
g3.
Conclusion. Therefore, the trustee has breached the duty of loyalty, and the transaction is voidable at the beneficiary's election.
MBE Check · multiple choice
A trustee invests 100% of trust assets in a single high-quality bond. The bond defaults. Did the trustee breach the duty of diversification?
Mini Essay · write the Application paragraph
Facts. T, trustee of a $5M trust, invested $4M in his own company's stock at the company's IPO. T was a major shareholder of the company. The IPO succeeded, and trust assets doubled in value.
Call. Did T breach any duties?
Practice Drill · tap to build the rule
Drop the chips here in correct order:
Tap chips to add → tap chips in the target to remove: