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Trust created a $2 million trust for Settlor's spouse, Mira, for life, remainder to Settlor's children, Noah and Priya. Trustee, who is Settlor's cousin, owned 40 percent of a struggling real estate company. Without telling any beneficiary about her ownership, Trustee caused the trust to lend the company $600,000 at a below-market interest rate and to buy a vacant parcel from the company for $300,000. An independent appraisal later showed that the parcel was worth $210,000 at the time of sale.
Trustee received a $50,000 management fee from the company after the loan closed. Mira later signed a short letter approving "the real estate investment" after Trustee told her only that the company was "local and promising." Noah and Priya were not told about Trustee's ownership, the below-market loan, the management fee, or the appraisal. The company later sold the parcel to a third party for $360,000, and Trustee argues that the trust suffered no loss because the parcel ultimately increased in value.
Discuss Trustee's fiduciary breaches, any consent or ratification defense, and the remedies the beneficiaries may seek.