Which remedy is available when a trustee engages in self-dealing?

• A. Reassignment of property to the settlor
• B. Exculpatory provision defeats liability
• C. No remedy exists
• D. Removal and replacement of the trustee

Answer: (D)

Self-dealing is a per se breach of the trustee’s fiduciary duty to act solely in the beneficiaries’ interest. Because the trust assets must be administered free of conflicts, the court’s primary response is to remove the offending trustee and appoint a successor to stop the breach and safeguard the trust. This preserves the trust’s integrity and protects the beneficiaries from ongoing self-interested dealings. Exculpatory provisions and reassigning property to the settlor do not adequately address the breach, and saying there’s no remedy ignores the court’s power to remove a conflicted trustee and ensure proper administration.