Article on Duty of Loyalty

Gregory T. Holtz (Adjunct Professor of Wills, Trusts, and Estates, Ave Maria School of Law) recently published her article entitled, Travels Along the Efficient Frontier…Toward a New Duty of Loyalty, 4 Est. Plan. & Community Prop. L.J. 79 (Fall 2011). An excerpt from the introduction to the article is below:

When Eugene Gant left his home and family in search of a better life in Thomas Wolfe’s novel Look Homeward Angel, he began to discover and understand the past does not always offer a bridge to the future. He realized the need and the imperative to turn one’s eyes to the “distant soaring ranges.” 

The same imperative has manifested itself within the trust and fiduciary landscape. It is no longer prudent or appropriate to rely on past practices and traditions. Instead, it is imperative that the fiduciary and his or her counsel turn their eyes upon a distant, soaring range brought about by changes in long standing theories and practices fundamentally altering approaches to trust investment and administration. Failure or refusal to accept changing landscapes creates liability, and in some cases ethical dilemmas and liabilities that did not exist even a quarter century ago. 

This paper will explore the impetus for such change and its implications for trustees and their counsel. It will take a fresh look at the historical backdrop that gave rise to prudent investing and the impact it has had on trust investment and administration.

However, there is another goal to this discussion. As one reflects on the sweeping change in the approach and purpose to fiduciary administration and investment, one cannot help but understand and believe that the interrelationship between the parties to the establishment of the trust–grantor, trustee, and beneficiary–has changed. Can it be argued that prudent investing and its imperative redefined the nature of fiduciary in this area?

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