De Facto Trustee Doctrine Recognized

Washington joins other states in growing trend

The doctrine of de facto trustee is gaining popularity in its recognition by state court’s and trust and estate jurisprudence. A person is a de facto trustee where the person (1) assumed the office of trustee under a color of right or title and (2) exercised the duties of the office. A person assumes the position of trustee under color of right or title where the person asserts “an authority that was derived from an election or appointment, no matter how irregular the election or appointment might be.” A de facto trustee’s good-faith actions are binding on third persons. Because the purported successor trustee in Allen Trust acted as trustee and assumed its office through an appointment it reasonably believed to be effective, it was a de facto trustee and was entitled to compensation for its services. Washington recently joined the growing number of jurisdictions using the de facto trustee concept (Alabama, New York, Oklahoma, and Oregon all recognize the concept.) Read the rest of this entry