Examination Timing: 00H00M23S
Michael, as trustee, breaches his trust by transferring trust funds to his personal account. Which of the following statements best describes the position?
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Your selected option: A
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The correct answer is A. When a trustee breaches their duty by misappropriating trust funds, the beneficiaries have the right to trace and recover those funds from the trustee's personal account. This equitable remedy allows the beneficiaries to follow the misappropriated funds and reclaim them. Tracing enables the identification and recovery of trust property that has been wrongfully disposed of, ensuring that beneficiaries' interests are protected.
Key Point: The equitable remedy of tracing allows beneficiaries to recover misappropriated trust funds by following the money into the trustee's personal account or any subsequent assets purchased with those funds.
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