                                 CODE OF VIRGINIA

DUTY OF LOYALTY (§ 64.2-764)

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 § 64.2-803, a sale, encumbrance, or other transaction involving the
investment or management of trust property entered into by the trustee for the
trustee&#8217;s own personal account or that is otherwise affected by a conflict
between the trustee&#8217;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 &#xA7; 64.2-796;

   4. The beneficiary consented to the trustee&#8217;s conduct, ratified the
   transaction, or released the trustee in compliance with &#xA7; 64.2-800; or

   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&#8217;s spouse;

   2. The trustee&#8217;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 a
   person that owns a significant interest in the trustee, has an interest that
   might affect the trustee&#8217;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 beyond the normal commercial advantage from such
transaction 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&#8217;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, investment
trust, mutual fund, or other investment or financial product to which the
trustee, or an affiliate of the trustee, sponsors, sells, or 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 Uniform Prudent Investor Act (&#xA7; 64.2-780 et seq.) and &#xA7;
64.2-1506. The trustee may be compensated by the investment company, investment
trust, mutual fund, or other investment or financial product, or by the
affiliated entity sponsoring, selling, or providing such service, and such
compensation may be in addition to the compensation the trustee is receiving as
a trustee if the trustee notifies the persons entitled to receive a copy of the
trustee&#8217;s annual report under &#xA7; 64.2-775 of the rate and method by
which that compensation was determined and of any subsequent changes to such
rate or method of compensation.

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&#8217;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.

I. 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.

HISTORY: 2005, c. 935, § 55-548.02; 2012, c. 614.