Self-Directed Checks and Fiduciary Authority
Some fiduciary transactions involve checks that move through the fiduciary's own hands. A trustee might write a check from a trust account to themselves. They may also receive a check from a third party and pass it along.
These self-directed moves can look unusual, but they are often proper. For example, a trustee may need to pay themselves back for trust-related expenses. A personal representative may need to redirect estate funds to cover a specific bill.
If a check or other bill of exchange is drawn by a fiduciary as such or in the name of his principal by a fiduciary empowered to draw such instrument in the name of his principal, payable to the fiduciary personally, or payable to a third person and by him transferred to the fiduciary, and is thereafter transferred by the fiduciary, whether in payment of a personal debt of the fiduciary or otherwise, the transferee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in transferring the instrument.
A.R.S. § 14-7505Good Faith Is the Standard
The person who receives the check is protected as long as they act in good faith. They do not need to look into the fiduciary's authority or motives.
The only exception is actual knowledge of a breach. If someone knows enough facts that accepting the check amounts to bad faith, they lose protection. This means the statute balances smooth transactions with real accountability.