Opinion ID: 1855904
Heading Depth: 1
Heading Rank: 15

Heading: trustee's management of the trust and attorney fees and expenses awarded to the trustee

Text: Appellees object to the trustee applying trust funds to pay off the balance of a personal loan owed by Herbert Coe to Farmers State Bank. The trial court held that the disposition of the trust funds was proper because Article VII of the trust agreement gave the trustee broad discretionary powers to pay expenses for the personal welfare of the trustor, Herbert C. Coe. We affirm on this issue. A trustee is bound to act in the highest good faith toward his beneficiary and a trustee may not in any manner use or deal with the trust property for his own profit or for any other purpose unconnected with the trust. SDCL 55-2-1 and 55-2-2. Payment of the personal loan was made within the lifetime of Herbert Coe, who was the principal lifetime beneficiary of the trust, and payment of the loan was to his benefit. Appellees object to an award of attorney fees to the trustee, asserting that the trustee failed to account for and preserve the trust property. Every trustee has a duty to take reasonable steps to control the trust property and to use reasonable care and skill to preserve it. Restatement (Second) of Trusts §§ 175-176 (1959). The trial court found that the trustee properly managed the trust property as well as it could and awarded attorney fees. The record indicates that trust property was removed from the Coe home and lumber yard offices. Under the circumstances, the trustee faced a difficult task in preserving the personal property of the trust. This property was located at the home where Herbert Coe lived and at the lumber yard office where he worked and also maintained an apartment, and was thus outside the trustee's control. On more than one occasion, the trustee attempted to obtain an accounting of the property. It also objected to removal of trust property from the Coe home and threatened to report the loss of property to the state's attorney. Furthermore, the trustee introduced into evidence a document, purportedly entered into by Herbert Coe and the trustee, that released the trustee from all liability for all personal property located in the Coe home while Herbert Coe resided there. In light of this evidence we do not believe the trial court was clearly erroneous in holding that the trustee acted properly and in awarding attorney fees to the trustee.