Self-dealing; transactions between trusts
Sec. 7. (a) Unless the terms of the trust provide otherwise, the
trustee has a duty:
(1) not to loan funds to himself or an affiliate;
(2) not to purchase or participate in the purchase of trust
property from the trust for the trustee's own or an affiliate's
account;
(3) not to sell or participate in the sale of the trustee's own or an
affiliate's property to the trust; or
(4) if a corporate trustee, not to purchase for or retain in the
trust its own or a parent or subsidiary corporation's stock,
bonds, or other capital securities. However, the trustee may
retain such securities already held in trusts created prior to
September 2, 1971.
(b) Unless the terms of the trust provide otherwise, a corporate
trustee may invest in, purchase for, or retain in the trust its own or an
affiliate's obligations, including savings accounts and certificates of
deposit, without the investment, purchase, or retention constituting
a conflict of interest under section 5 of this chapter.
(c) Unless the terms of the trust provide otherwise, a corporate
trustee does not violate subsection (a) by investing in, purchasing for,
or retaining in the trust its own or an affiliate's obligations, including
savings accounts and certificates of deposit, if the payment of each
obligation is fully insured by the Bank Insurance Fund or the Savings
Association Insurance Fund of the Federal Deposit Insurance
Corporation, the National Credit Union Share Insurance Fund, or any
insurer approved by the department of financial institutions under
IC 28-7-1-31.5.
(d) If the terms of the trust permit the trustee to deal with a
beneficiary for the trustee's own account, the trustee has a duty to
deal fairly with and to disclose to the beneficiary all material facts
related to the transaction which the trustee knows or should know.
(e) Unless the terms of the trust provide otherwise, the trustee
may sell, exchange, or participate in the sale or exchange of trust
property from one (1) trust to himself as trustee of another trust,
provided the sale or exchange is fair and reasonable with respect to
the beneficiaries of both trusts and the trustee discloses to the
beneficiaries of both trusts all material facts related to the sale or
exchange which the trustee knows or should know.
(f) This section does not prohibit a trustee from enforcing or
fulfilling any enforceable contract or agreement:
(1) executed during the settlor's lifetime; and
(2) between the settlor and the trustee in the trustee's individual
capacity.
(Formerly: Acts 1971, P.L.416, SEC.4.) As amended by Acts 1982,
P.L.171, SEC.118; P.L.174-1986, SEC.1; P.L.8-1991, SEC.34;
P.L.176-1996, SEC.34; P.L.238-2005, SEC.34.
Last modified: May 27, 2006