Why infect the law of trusts with good faith doctrine?

Why infect the law of trusts with good faith doctrine?

Article posted in on 3 March 2014| comments
audience: Charles E. Rounds Jr, Fiduciary Consultant | last updated: 5 March 2014
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by Charles E. Rounds, Jr. Fiduciary Consultant

The law's good faith principle has traditionally regulated legal relationships, such as the contractual relationship. Equity's more intense fiduciary principle has generally regulated equitable relationships, such as the trustee-beneficiary relationship. Now comes the Uniform Trust Code, specifically § 105, and provides that “the terms of a trust prevail over any....[of the Code's provisions]... except…the duty of a trustee to act in good faith…” This provision is “echoed” in § 801 (Duty to Administer Trust). What is one to make of this? The official commentary is devoid of any explanation. Could we be seeing here a stealth retirement of the fiduciary principle when it comes to the regulation of trusteeships? Or is this just a gratuitous muddling and conflating of nomenclature?

Charles E. Rounds, Jr., et al. speculate in §8.15.81 of Loring and Rounds: A Trustee’s Handbook, at page 1237 of the 2014 edition. See also § 3.5.3.2(a) [page 182 of the 2014 edition]. Section 8.15.81 is reproduced in its entirety here.

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