Minnesota Statutes 501C.0802 – Duty of Loyalty
(a) A trustee owes a duty of loyalty to the beneficiaries. A trustee shall not place the trustee’s own interests above those of the beneficiaries.
Terms Used In Minnesota Statutes 501C.0802
- 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
- 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.
- Decedent: A deceased person.
- Fiduciary: A trustee, executor, or administrator.
- Person: may extend and be applied to bodies politic and corporate, and to partnerships and other unincorporated associations. See Minnesota Statutes 645.44
- Trustee: A person or institution holding and administering property in trust.
- Violate: includes failure to comply with. See Minnesota Statutes 645.44
(b) Subject to the rights of persons dealing with or assisting the trustee as provided in section 501C.1012, 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 which is otherwise affected by a conflict between the trustee’s fiduciary and personal interests is voidable by a beneficiary affected by the transaction 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 time allowed by section 501C.1005;
(4) the beneficiary consented to the trustee’s conduct, ratified the transaction, or released the trustee in compliance with section 501C.1009; or
(5) the transaction involves a contract entered into or claim acquired by the trustee before the person became a 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, parents, or their spouses;
(3) an agent or an attorney of the trustee; or
(4) a corporation or other person or enterprise in which the trustee, or a person who owns a significant interest in the trustee, has an interest that might affect the trustee’s best judgment.
(d) 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; or
(5) an advance by the trustee of money for the protection of the trust.
(e) The court may appoint a special fiduciary to make a decision with respect to any proposed transaction that might violate this section if entered into by the trustee.