In Bjorn-Roli v. Mulligan,[1] the supreme court held that a trustee using trust funds to maintain trust property her son was staying on free of rent did not require removal even though it was a breach of fiduciary duty. After the death of her parents, Bjorn-Roli was appointed as sole trustee of two trusts with a responsibility for dividing the trust assets into two new trusts, one for her, and another for her sister Mulligan. After three failed attempts to distribute the trust assets, Mulligan sued her sister, alleging a breach of fiduciary duty and fraud. During this period, Bjorn-Roli allowed her son to stay without rent at a trust property and paid for the maintenance of the property with trust funds. Mulligan argued this was a breach of Bjorn-Roli’s fiduciary duty, and consequently that Bjorn-Roli should be removed as trustee. The superior court agreed it was a breach of fiduciary duty, but refrained from removing Bjorn-Roli from being the trustee. The superior court found Bjorn-Roli trustworthy, and emphasized the finding that Bjorn-Roli’s actions were made openly and gave Mulligan notice. The supreme court affirmed the superior court’s decision to not remove Bjorn-Roli’s trustee position in spite of the breach of fiduciary duty, holding that a trustee using trust funds to maintain trust property her son was staying on free of rent did not require removal even though it was a breach of fiduciary duty.
[1] 436 P.3d 962 (Alaska 2019).