Which of the following transactions is considered self-dealing by a trustee?

• A. Selling property to the trust
• B. Borrowing from the trust
• C. Acting as a neutral executor
• D. Maintaining separate trust and personal accounts

Answer: (B)

Self-dealing happens when a trustee uses the position to obtain a personal benefit at the expense or risk to the trust. Borrowing from the trust is a classic example because it puts the trustee in a position to use trust assets for personal use and creates a direct conflict of interest—the trustee owes a duty of loyalty to beneficiaries and cannot finance personal needs out of the trust’s funds.

By contrast, maintaining separate trust and personal accounts shows proper separation of funds, and acting as a neutral executor is about fair administration of the estate or trust. Selling property to the trust could raise conflicts and require careful scrutiny, but the clearest, most straightforward example of self-dealing among these is borrowing from the trust.