Richard is the trustee of the Williams family Trust. Last year he directed Steve a broker, to purchase an unauthorized investment for the Trust. Both Richard and Steve realized that the investment was unauthorized, but both thought the trust investment clause was too
Richard is the trustee of the Williams family Trust. Last year he directed Steve a broker, to purchase an unauthorized investment for the Trust. Both Richard and Steve realized that the investment was unauthorized, but both thought the trust investment clause was too
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Richard is the trustee of the Williams family Trust. Last year he directed Steve a broker, to purchase an unauthorized investment for the Trust. Both Richard and Steve realized that the investment was unauthorized, but both thought the trust investment clause was too restrictive. Furthermore, David a solicitor, advised Richard that so long he was taking risk in the best interest of the beneficiaries, he would be protected by the trustee exemption clause in the trust instrument. He also advised Steve that it would be very unlikely for the court not to exonerate him as well even though not being a trustee, he did not have a specific protection of the clause. Richard and Steve proceed with the investment in good faith, Steve taking a $10,000 brokerage fee. The investment which was initially worth US$100,000 is now worth US$ 50,000 after just 3 weeks from the date of the unauthorized change.
Advise the beneficiaries.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education