The Two-Hatted FiduciaryThe Two-Hatted Fiduciary

Fiduciaries often wear multiple hats:  trustee and beneficiary, trustee and trust attorney and so on. We’ll focus on arguably the most fraught two-hatted trusteeship of all—the trustee who also serves as the chief executive of the company that the trust owns in whole or even in part.  

Especially in family businesses, that scenario is a common one: One family member will often appoint another with experience running the company (typically a sibling or a child) to serve as trustee of one or more trusts into which shares in the company are placed. From the trust settlor’s standpoint, the benefits of “keeping things in the family” are obvious: Because the trustee already has intimate familiarity with both the company and the trust’s benefici...