58a-802. Duty of loyalty.
58a-802
58a-802. Duty of loyalty.(a) A trustee shall administer the trust consistent with the terms of the trustand solely in the interests of the beneficiaries.
(b) Subject to the rights of persons dealing with or assisting the trusteeas provided in K.S.A. 58a-1012, and amendments thereto, a sale,encumbrance, or other transaction involving the investment or management oftrust property entered into by the trustee for the trustee's own personalaccount or which is otherwise affected by a conflict between the trustee'sfiduciary and personal interests is voidable by a beneficiary affected by thetransaction unless:
(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 timeallowed by K.S.A. 58a-1005, and amendments thereto;
(4) the beneficiary consented to the trustee's conduct, ratified thetransaction, or released the trustee in compliance with K.S.A. 58a-1009, and amendments thereto; or
(5) the transaction involves a contract entered into or claim acquired by thetrustee before the person became or contemplated becoming trustee.
(c) A sale, encumbrance, or other transaction involving the investment ormanagement of trust property is presumed to be affected by a conflict betweenpersonal and fiduciary interests if it is entered into by the trustee with:
(1) The trustee's spouse;
(2) the trustee's descendants, siblings, parents, or their spouses;
(3) an agent or attorney of the trustee; or
(4) a corporation or other person or enterprise in which the trustee, or aperson that owns a significant interest in the trustee, has an interest thatmight affect the trustee's best judgment.
(d) A transaction between a trustee and a beneficiary that does not concerntrust property but that occurs during the existence of the trust or while thetrustee retains significant influence over the beneficiary and from which thetrustee obtains an advantage is voidable by the beneficiary unless the trusteeestablishes that the transaction was fair to the beneficiary.
(e) A transaction not concerning trust property in which the trustee engagesin the trustee's individual capacity involves a conflict between personal andfiduciary interests if the transaction concerns an opportunity properlybelonging to the trust.
(f) An investment by a trustee in securities of an investment company orinvestment trust to which the trustee, or its affiliate, provides services in acapacity other than as trustee is not presumed to be affected by a conflictbetween personal and fiduciary interests if the investment otherwisecomplies with theprudent investor rule of article 9 of this code. In addition to itscompensation for acting as trustee, the trustee, or its affiliate, maybe compensated by theinvestment company or investment trust for providing those services out of feescharged to the trust. If the trustee, or its affiliate, receivescompensation from the investmentcompany or investment trust for providing investment advisory or investmentmanagement services, the trustee shall at least annuallynotify the personsentitled to receive a copy of the trustee's annual report, under K.S.A.58a-813, and amendments thereto, of the rate, formula or method by whichthat compensation was determined.
(g) In voting shares of stock or in exercising powers of control over similarinterests in other forms of enterprise, the trustee shall act in the bestinterests of the beneficiaries and consistent with the terms of the trust. Ifthe trust is the sole owner of a corporation or other form of enterprise, thetrustee shall elect or appoint directors or other managers who will manage thecorporation or enterprise in the best interests of the beneficiaries.
(h) This section does not preclude the following transactions, if fair to thebeneficiaries:
(1) An agreement between a trustee and a beneficiary relating to theappointment 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, orconservatorship of which the trustee is a fiduciary or in which a beneficiaryhas an interest;
(4) a deposit of trust money in a regulated financial-service institutionoperated by the trustee; or
(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 respectto any proposed transaction that might violate this section if entered into bythe trustee.
History: L. 2002, ch. 133, § 59;L. 2004, ch. 158, § 11;L. 2006, ch. 23, § 11; July 1.