14-10802

14-10802. Duty of loyalty

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

B. Subject to the rights of persons dealing with or assisting the trustee as
provided in section 14-11012, 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 that is otherwise affected by a conflict between the trustee's
fiduciary and personal interests is voidable by a beneficiary affected by the transaction
unless either:

1. The transaction was authorized by the terms of the trust.

2. The transaction was approved by the court.

3. The beneficiary did not commence a judicial proceeding within the time allowed
by section 14-11005.

4. The beneficiary consented to the trustee's conduct, ratified the transaction or
released the trustee in compliance with section 14-11009.

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

C. 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:

1. The trustee's spouse.

2. The trustee's descendants, siblings or parents or their spouses.

3. An agent or attorney of the trustee.

4. 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.

D. A transaction between a trustee and a beneficiary that does not concern trust
property but that occurs during the existence of the trust or while the trustee retains
significant influence over the beneficiary and from which the trustee obtains an
advantage is voidable by the beneficiary unless the trustee establishes that the
transaction was fair to the beneficiary.

E. A transaction not concerning 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.

F. 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 prudent investor rule of article
9 of this chapter. 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 at
least annually notifies the persons entitled under section 14-10813 to receive a copy of
the trustee's annual report that the bank or trust company provides services for and
receives fees from the investment company or investment trust. This notification may be
made in the trustee's statements of the fiduciary account.

G. 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 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 who will
manage the corporation or enterprise in the best interests of the beneficiaries.

H. This section does not preclude the following transactions, if fair to the
beneficiaries:

1. An agreement between a trustee and a beneficiary relating to the appointment or
compensation of the trustee.

2. Payment of reasonable compensation to the trustee.

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

4. A deposit of trust money in a regulated financial service institution operated
by the trustee.

5. An advance by the trustee of money for the protection of the trust.

I. The court may appoint a special fiduciary to make a decision with respect to any
proposed transaction that may violate this section if entered into by the trustee.