What does "self-dealing" refer to in fiduciary duties?

In the context of fiduciary duties, "self-dealing" specifically refers to situations where a fiduciary engages in transactions that benefit themselves at the expense of the beneficiary. This practice is seen as a violation of fiduciary responsibility because a fiduciary has a legal and ethical obligation to act in the best interest of their beneficiaries. When a fiduciary prioritizes their own interests or gains over those they are meant to serve, it undermines the trust and obligation inherent in the fiduciary relationship.

For example, if a trustee were to sell trust property to themselves at a discount, that would be a clear case of self-dealing, as they are benefiting personally while potentially harming the interests of the beneficiaries. This is in stark contrast to actions such as making investments in beneficiary-owned businesses, which could be in the best interest of the beneficiary, or seeking approval from beneficiaries before taking actions, which demonstrates transparency and respect for the beneficiaries' interests. Additionally, reducing their own fees to favor beneficiaries does not constitute self-dealing; rather, it reflects a fiduciary acting responsibly by prioritizing the beneficiaries' financial well-being.