Trustee Liability

In remedying breaches of its vaunted duty of loyalty,' the law of trusts in New York is fettered by rules that emphasize restitutionary principles. Created by a stubborn adherence to absolute liability, this emphasis persists because it was written into the Restatement of Trusts. Although absolute liability and restitution of gain may still serve valid purposes,' justice requires an inquiry into the character of the breach as well as full compensation of the beneficiary when a trustee makes a sale tainted with a conflict of interest.The trustee owes a duty of loyalty to the beneficiary." The selfdealing trustee 8 who neglects to obtain prior court approval is buttably presumed to be disloyal ' the no further inquiry rule bars consideration of good faith and fairness." Such absolute liability is intended to negate the temptation of self-interest." Because of the no further inquiry rule, however, honest and dishonest trustees are subject to the same measures of damages. These measures do not permit the beneficiary