Here's the latest from the Massachusetts courts:

Pantazis v. Tsourides, Case No. 99-2362-C, 2009 Mass. Super. LEXIS 210 (Worcester Super. Ct. July 8, 2009), is a recently-reported superior court decision addressing alleged breaches of fiduciary duty and self-dealing by the defendant trustees. One of the trustees is alleged to have destroyed trust records and used trust assets to finance her own business. The other trustee is alleged to have used the trust's bank accounts for his own purposes. The court made factual findings too lengthy to try to summarize, but some of the court's rulings of Massachusetts law bear repeating generally.

First, regarding the plaintiffs' claim for an accounting, the court explained that an accounting is a judicial proceeding in equity in which the court adjudicates the amount of funds that ought to be in the possession of the trust and makes a determination of any amounts for which the trustee is liable to the trust or its beneficiaries. A claim for an accounting is distinct from a written "account" rendered by a trustee, and at the conclusion of an accounting proceeding the court is empowered to terminate the trust and order distribution of the trust assets, provided the trust is subject to termination by the parties.

Second, a trustee has a duty to maintain clear records of the disposition of trust assets, and the trustee's destruction of trust records constitutes a breach of fiduciary duty. It can also constitute spoliation of evidence which would warrant the sanction of an adverse inference against the trustee. Here, the trustee who had destroyed trust records was precluded from rebutting the opinion evidence offered by the plaintiffs' expert regarding the amount of the trust assets that had been diverted.

Third, if a trustee assumes to use trust assets in any manner for his own benefit or in his own business, he must account for all profits arising from such use and a beneficiary can hold the trustee accountable for a share of the profits of the business. Disgorgement of such profits is the appropriate remedy in order to deny any profit and unjust enrichment to the self-dealing trustee. All profits earned by the trustee using the trust assets are owed to the trust.

Fourth, upon a finding of breach of fiduciary duty by a trustee, plaintiffs are entitled to pre-complaint interest -- as opposed to merely pre-judgment interest running from the filing of the complaint -- and the court has wide discretion in setting the appropriate interest rate to be applied.

Fifth, a breaching trustee who also happens to be a beneficiary of the trust forfeits his share of the trust property unless and until he makes good on the loss he caused to the beneficiaries.