Mich. Comp. Laws » Michigan Compiled Laws / Chapter 700 / Act 386 of 1998
Michigan Compiled Laws

Mich. Comp. Laws § 700.7802 (2026)

Duty of loyalty.

✓ current as of July 2026
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ESTATES AND PROTECTED INDIVIDUALS CODE


Act 386 of 1998


700.7802 Duty of loyalty.

Sec. 7802.

    (1) A trustee shall administer the trust solely in the interests of the trust beneficiaries.

    (2) Subject to the rights of persons dealing with or assisting the trustee as provided in section 7912, a sale, encumbrance, or other transaction involving the investment or management of trust property entered into by the trustee for the trustee's own personal account or which is otherwise affected by a substantial conflict between the trustee's fiduciary and personal interests is voidable by a trust beneficiary affected by the transaction unless 1 or more of the following apply:

    (a) The transaction was authorized by the terms of the trust.

    (b) The transaction was approved by the court after notice to the interested persons.

    (c) The trust beneficiary did not commence a judicial proceeding within the time allowed by section 7905.

    (d) The trust beneficiary consented to the trustee's conduct, ratified the transaction, or released the trustee in compliance with section 7909.

    (e) The transaction involves a contract entered into or claim acquired by the trustee before the person became or contemplated becoming trustee.

    (f) The transaction is otherwise permitted by statute.

    (3) A sale, encumbrance, or other transaction involving the investment or management of trust property is presumed to be affected by a conflict between personal and fiduciary interests if it is entered into by the trustee with any of the following:

    (a) The trustee's spouse.

    (b) The trustee's descendant, sibling, or parent or the spouse of a descendant, sibling, or parent.

    (c) An agent or attorney of the trustee.

    (d) A corporation or other person or enterprise in which the trustee, or a person that owns a significant interest in the trustee, has an interest that might affect the trustee's best judgment.

    (4) A transaction that does not concern trust property in which the trustee engages in the trustee's individual capacity involves a conflict between personal and fiduciary interests if the transaction concerns an opportunity properly belonging to the trust.

    (5) An investment by a trustee in securities of an investment company or investment trust to which the trustee, or its affiliate, provides services in a capacity other than as trustee is not presumed to be affected by a conflict between personal and fiduciary interests if the investment otherwise complies with the Michigan prudent investor rule. In addition to its compensation for acting as trustee, the trustee may be compensated by the investment company or investment trust for providing those services out of fees charged to the trust. If the trustee receives compensation from the investment company or investment trust for providing investment advisory or investment management services, the trustee shall at least annually notify the persons entitled under section 7814 to receive a copy of the trustee's annual report of the rate and method by which that compensation was determined.

    (6) In voting shares of stock or in exercising powers of control over similar interests in other forms of enterprise, the trustee shall act in the best interests of the trust beneficiaries. If the trust is the sole owner of a corporation or other form of enterprise, the trustee shall elect or appoint directors or other managers to manage the corporation or enterprise in the best interests of the trust beneficiaries.

    (7) This section does not preclude the following transactions, if fair to the trust beneficiaries:

    (a) An agreement between a trustee and a trust beneficiary relating to the appointment or compensation of the trustee.

    (b) Payment of reasonable compensation to the trustee.

    (c) A transaction between a trust and another trust, decedent's estate, or conservatorship of which the trustee is a fiduciary or in which a trust beneficiary has an interest.

    (d) A deposit of trust money in a financial institution operated by or affiliated with the trustee.

    (e) An advance by the trustee of money for the protection of the trust.

History: Add. 2009, Act 46, Eff. Apr. 1, 2010

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Notes of Decisions
Cited in 16 cases (9 in the last 5 years), 2015–2025 · leading case: in Re Thomas Rowe Stockton Trust (Mich. Ct. App. 2017).
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in Re Thomas Rowe Stockton Trust (Mich. Ct. App. 2017). · cites it 3× “By statute, “[a] trustee is required to administer the trust solely in the interests of the trust beneficiaries,” MCL 700.7802(1); and, in doing so, the trustee “shall act as would a prudent person in dealing with the property of another, including following the standards of the…”
in Re Beverly J Laforest Trust & Beverly J Laforest Fam. Trust (Mich. Ct. App. 2016). · cites it 2× “Since the funds appellant used to purchase the vehicle and the $13,500 in checks that she had written to herself were assets that were never placed into the Living Trust, MCL 700.”
In Re Wallace Howe Fam. Trust (Mich. Ct. App. 2022). · cites it 2× “” MCL 700.7802(1). A trustee may receive reasonable compensation for services rendered for the trust.”
In Re Howe Est. (Mich. Ct. App. 2023). · cites it 2× ““Upon acceptance of a trusteeship, the trustee shall administer the trust in good faith, expeditiously, in accordance with its terms and purposes, for the benefit of the trust beneficiaries, and in accordance with this article.”
in Re mcmullen/butler Trust (Mich. Ct. App. 2015). · cites it 3× “7801 and MCL 700.7802 and a conflict of interest pursuant to MCL 700.”
in Re Gerald R Mahoney Trust & Nancy W Mahoney Trust (Mich. Ct. App. 2015). · cites it 3× “Kim maintains that the transaction was voidable pursuant to MCL 700.7802. We disagree. That actions by a trustee which involve self-dealing are voidable under certain circumstances has long been recognized in Michigan.”
in the Matter of Soble Fam. Trust (Mich. Ct. App. 2017). “”3 Only Jeffrey signed the consent to assignment, which appears to unilaterally alter the assignment of interest, whereas each of the beneficiaries executed the assignments of interest, which convey that the document intended to “transfer and assign all of Assignor’s interests…”
in the Matter of Soble Fam. Trust (Mich. Ct. App. 2017). “”3 Only Jeffrey signed the consent to assignment, which appears to unilaterally alter the assignment of interest, whereas each of the beneficiaries executed the assignments of interest, which convey that the document intended to “transfer and assign all of Assignor’s interests…”
in Re Margaret E White Trust (Mich. Ct. App. 2019). “” MCL 700.7802 imposes on a trustee the duty to “act as would a prudent person in dealing with the property of another, including following the standards of the Michigan prudent investor rule.”
In Re Anne M Spivak Revocable Trust (Mich. Ct. App. 2022). “A trustee has a duty to “administer the trust in good faith, expeditiously, in accordance with its terms and purposes, for the benefit of the trust beneficiaries . . . .” MCL 700.7801. A trustee owes a duty of loyalty to the trust beneficiaries, meaning he or she “shall…”
In Re Dorothy Marie Talanda Trust (Mich. Ct. App. 2022). “7803, The trustee shall act as would a prudent person in dealing with the property of another, including following the standards of the Michigan prudent investor rule.”
20221117_C357831_47_357831.Opn.Pdf (Mich. Ct. App. 2022). “” MCL 700.7802(1). A trustee must “act as would a prudent person in dealing with the property of another,” MCL 700.”
Show all 16 citing cases →
— Mich. Comp. Laws § 700.7802(1) — 12 cases
in Re Beverly J Laforest Trust & Beverly J Laforest Fam. Trust (Mich. Ct. App. 2016). “Since the funds appellant used to purchase the vehicle and the $13,500 in checks that she had written to herself were assets that were never placed into the Living Trust, MCL 700.”
in Re Thomas Rowe Stockton Trust (Mich. Ct. App. 2017). “By statute, “[a] trustee is required to administer the trust solely in the interests of the trust beneficiaries,” MCL 700.7802(1); and, in doing so, the trustee “shall act as would a prudent person in dealing with the property of another, including following the standards of the…”
in the Matter of Soble Fam. Trust (Mich. Ct. App. 2017). “”3 Only Jeffrey signed the consent to assignment, which appears to unilaterally alter the assignment of interest, whereas each of the beneficiaries executed the assignments of interest, which convey that the document intended to “transfer and assign all of Assignor’s interests…”
in the Matter of Soble Fam. Trust (Mich. Ct. App. 2017). “”3 Only Jeffrey signed the consent to assignment, which appears to unilaterally alter the assignment of interest, whereas each of the beneficiaries executed the assignments of interest, which convey that the document intended to “transfer and assign all of Assignor’s interests…”
In Re Anne M Spivak Revocable Trust (Mich. Ct. App. 2022). “A trustee has a duty to “administer the trust in good faith, expeditiously, in accordance with its terms and purposes, for the benefit of the trust beneficiaries . . . .” MCL 700.7801. A trustee owes a duty of loyalty to the trust beneficiaries, meaning he or she “shall…”
— Mich. Comp. Laws § 700.7802(2) — 1 case
in Re Gerald R Mahoney Trust & Nancy W Mahoney Trust (Mich. Ct. App. 2015). “Kim maintains that the transaction was voidable pursuant to MCL 700.7802. We disagree. That actions by a trustee which involve self-dealing are voidable under certain circumstances has long been recognized in Michigan.”
— Mich. Comp. Laws § 700.7802(7)(b) — 3 cases
in Re Thomas Rowe Stockton Trust (Mich. Ct. App. 2017). “By statute, “[a] trustee is required to administer the trust solely in the interests of the trust beneficiaries,” MCL 700.7802(1); and, in doing so, the trustee “shall act as would a prudent person in dealing with the property of another, including following the standards of the…”
In Re Wallace Howe Fam. Trust (Mich. Ct. App. 2022). “” MCL 700.7802(1). A trustee may receive reasonable compensation for services rendered for the trust.”
In Re Howe Est. (Mich. Ct. App. 2023). ““Upon acceptance of a trusteeship, the trustee shall administer the trust in good faith, expeditiously, in accordance with its terms and purposes, for the benefit of the trust beneficiaries, and in accordance with this article.”
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