Arizona Laws 14-10802. Duty of loyalty
A. A trustee shall administer the trust solely in the interests of the beneficiaries.
Terms Used In Arizona Laws 14-10802
- Agent: includes an attorney-in-fact under a durable or nondurable power of attorney, a person who is authorized to make decisions concerning another person's health care and a person who is authorized to make decisions for another person under a natural death act. See Arizona Laws 14-1201
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Beneficiary: means a person who either:
(a) Has a present or future beneficial interest in a trust, vested or contingent. See Arizona Laws 14-10103
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Court: means the superior court. See Arizona Laws 14-1201
- Decedent: A deceased person.
- Estate: includes the property of the decedent, trust or other person whose affairs are subject to this title as originally constituted and as it exists from time to time during administration. See Arizona Laws 14-1201
- Fiduciary: A trustee, executor, or administrator.
- Fiduciary: includes a personal representative, guardian, conservator and trustee. See Arizona Laws 14-1201
- Interests of the beneficiaries: means the beneficial interests provided in the terms of the trust. See Arizona Laws 14-10103
- Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency or instrumentality, public corporation or any other legal or commercial entity. See Arizona Laws 14-10103
- Proceeding: includes action at law and suit in equity. See Arizona Laws 14-1201
- Property: means anything that may be the subject of ownership, whether real or personal, legal or equitable, or any interest in anything that may be the subject of ownership. See Arizona Laws 14-10103
- Trust: includes an express trust, private or charitable, with any additions, wherever and however created. See Arizona Laws 14-1201
- Trust company: means a financial institution, corporation or other legal entity that is authorized to exercise general trust powers. See Arizona Laws 14-9101
- Trustee: A person or institution holding and administering property in trust.
- Trustee: includes an original, additional and successor trustee and a cotrustee. See Arizona Laws 14-10103
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.