2010 Pennsylvania Code
Title 20 - DECEDENTS, ESTATES AND FIDUCIARIES
Chapter 77 - Trusts
7772 - Duty of loyalty - UTC 802.

     § 7772.  Duty of loyalty - UTC 802.
        (a)  Duty of trustee.--A trustee shall administer the trust
     solely in the interests of the beneficiaries.
        (b)  Effect of conflict of interest.--Subject to the rights
     of persons dealing with or assisting the trustee as provided in
     section 7790.2 (relating to protection of person dealing with
     trustee - UTC 1012), a sale, purchase, exchange, encumbrance or
     other disposition of property between a trust and either the
     trustee in the trustee's individual capacity or one of the
     persons identified in subsection (c) is voidable by a court upon
     application by a beneficiary affected by the transaction unless:
            (1)  the transaction was authorized by the trust
        instrument;
            (2)  the transaction was approved by the court;
            (3)  the beneficiary did not commence a judicial
        proceeding within the time allowed by section 7785 (relating
        to limitation of action against trustee);
            (4)  the beneficiary consented to the trustee's conduct,
        ratified the transaction or released the trustee in
        compliance with section 7789 (relating to beneficiary's
        consent, release or ratification - UTC 1009); or
            (5)  the transaction involves a contract entered into or
        claim acquired by the trustee before the person became or
        contemplated becoming a trustee.
        (c)  What constitutes conflict of interest.--A sale,
     purchase, exchange, encumbrance or other disposition of 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 parent or a spouse of the parent;
            (3)  a descendant of the trustee's parent or a spouse of
        the descendant;
            (4)  an agent of the trustee unless the trustee is a
        corporation and the agent is an affiliate of the corporation
        or the transaction is authorized by section 7209 (relating to
        mutual funds);
            (5)  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
        judgment, but this paragraph does not apply to an affiliate
        of a corporate trustee or to a transaction authorized by
        section 7209; or
            (6)  the trustee personally.
        (d)  Transactions between trustee and beneficiary.--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 a court upon application by the
     beneficiary unless the trustee establishes that the transaction
     was fair to the beneficiary.
        (e)  Conflict regarding trust opportunity.--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)  (Reserved).
        (g)  Business enterprises.--In voting shares of stock or in
     exercising powers of control over similar interests in other
     forms of business 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 business enterprise in the best interests of the
     beneficiaries.
        (h)  Permissible transactions.--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
        and payment of reasonable compensation to affiliates of a
        corporate trustee if the compensation is disclosed to the
        current beneficiaries;
            (3)  a transaction between a trust and another trust,
        decedent's estate or guardianship, 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; or
            (6)  a transaction authorized by section 7209.
        (i)  (Reserved).