Removal of Trustee for Conflict of Interest

In re: Trust of Bernard, Summit App. No. 24025, 2008-Ohio-48338. Testamentary Trust was established with income to family member during her lifetime and remainder interest upon the death of the family member to go to a church that the settlor helped found. The Trust language acknowledged that the Trustee had a conflict of interest as a recipient of a $50,000 bequest and having an affiliation with the church. The Trustee also became a member of the Board of Trustees of the church as well. During Trust administration, a settlement agreement was reached between the Trust and the church involving the return of a piece of property to the church. Upon the request of the income beneficiary to the Trust, the Trustee was removed due to her conflict of interest. The Court of Appeals noted that the Probate Court had clear and convincing evidence to support a finding that a conflict of interest existed since the Trustee's decisions favored the church by causing assets to be diverted from the Trust to the church rather than retained by the Trust for the benefit of the current beneficiary. The Court noted that the Trust provision recognizing a potential conflict did not excuse the Trustee from the disregard of her fiduciary duty in acting in the best interest of the Trust and its current beneficiary.