The Missouri Court of Appeals has upheld a jury verdict of $850,000 against a former co-trustee after a trust which he co-managed was depleted of over a million dollars without such monies going to the beneficiaries. The appeals court found sufficient evidence that the co-trustee engaged in self-dealing, such as pledging a loan in the amount of $200,000 to a sports and entertainment group; transferring nearly $140,000 to a start-up winery/bed-and-breakfast; and paying himself and another co-trustee $264,628 in trustee fees. At trial, there was evidence that the typical trustee fees for the same period would have been $38,000. In his defense, the co-trustee asserted that he provided valuable and necessary services to the trust, including work related to maintaining the condition of a farm property as a productive asset for which the beneficiaries benefitted. He also contended that he had special skills or expertise for which he was entitled to additional compensation as a trustee. The Court of Appeals disagreed, finding more than sufficient evidence that the co-trustee:
- Failed to administer the trust solely in the interests of the beneficiaries;
- Failed to administer the trust as a prudent person would;
- Failed to keep the beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests, and;
- Failed to exercise reasonable care to prevent his co-trustee from committing a serious breach of trust.