In Miller v. Miller, the trustees of the family trust of which Clifford Miller was a beneficiary almost completely prevailed on an appeal of a final judgment refusing to remove the co-trustees, approving a lease renewal entered into by the trustees, and awarding attorney’s fees. So, where didn’t they prevail?
Miller filed a surcharge action alleging that the trustees improperly entered into a lease agreement that did not provide fair market value to the trust. The lease agreement was entered into by the trustees on behalf of the trust and a company in which the trustees held an ownership interest.
While the appellate court affirmed the trial court’s finding that the trustees acted in the best interest of the trust in entering the lease agreement, the appellate court refused to affirm the part of the final order approving a renewed lease. The appellate court held that “[i]t will be incumbent upon the trustees to secure approval of any new lease for the property, which involves a potential conflict of interest.”
Depending on the jurisdiction, there are probably several ways to obtain approval of that sort of action (e.g., petition for equitable direction, declaratory judgment, waivers and releases, etc.), but the key is that if you’re a fiduciary about to take an act in that capacity which might provide a personal benefit to you – get approval first.