Which duty prohibits personal involvement that creates conflicts of interest, such as buying or borrowing for personal gain, unless authorized?

Which duty prohibits personal involvement that creates conflicts of interest, such as buying or borrowing for personal gain, unless authorized?

• A. TRUSTEE LOYALTY
• B. TRUSTEE SELF-DEALING
• C. TRUSTEE PRUDENCE
• D. TRUSTEE DISCLOSE AND ACCOUNT

Answer: (B)

Self-dealing is the trustee’s ban on personal involvement in transactions that put the trustee’s own interests ahead of the beneficiaries’. When a trustee buys or borrows for personal gain from or with the trust, it creates a conflict of interest that undermines the beneficiaries’ interests. The rule can permit such actions only if there’s explicit authorization—typically from the trust terms or by beneficiaries or a court—otherwise it violates the duty to avoid self-dealing. This focused prohibition is what makes self-dealing the best fit for the described duty.

Self-dealing is the trustee’s ban on personal involvement in transactions that put the trustee’s own interests ahead of the beneficiaries’. When a trustee buys or borrows for personal gain from or with the trust, it creates a conflict of interest that undermines the beneficiaries’ interests. The rule can permit such actions only if there’s explicit authorization—typically from the trust terms or by beneficiaries or a court—otherwise it violates the duty to avoid self-dealing. This focused prohibition is what makes self-dealing the best fit for the described duty.