(1) A trustee must administer the trust solely in the interests of the beneficiaries.
(2) Subject to the rights of persons dealing with or assisting the trustee as provided in RCW
11.98.105, 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:
(a) The transaction was authorized by the terms of the trust;
(b) The transaction was approved by the court or approved in a nonjudicial binding agreement in compliance with RCW
11.96A.210 through
11.96A.250;
(c) The beneficiary did not commence a judicial proceeding within the time allowed by RCW
11.96A.070;
(d) The beneficiary consented to the trustee's conduct, ratified the transaction, or released the trustee in compliance with RCW
11.98.108; or
(e) The transaction involves a contract entered into or claim acquired by the trustee before the person became or contemplated becoming trustee.
(3)(a) A sale, encumbrance, or other transaction involving the investment or management of trust property is presumed to be "otherwise affected" by a conflict between fiduciary and personal interests under this section if it is entered into by the trustee with:
(i) The trustee's spouse or registered domestic partner;
(ii) The trustee's descendants, siblings, parents, or their spouses or registered domestic partners;
(iii) An agent or attorney of the trustee; or
(iv) 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.
(b) The presumption is rebutted if the trustee establishes that the conflict did not adversely affect the interests of the beneficiaries.
(4) 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 that is voidable under subsection (2) of this section may be voided by a beneficiary without further proof.
(5) 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 complies with the prudent investor rule of chapter
11.100 RCW. In addition to its compensation for acting as trustee, 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 receives compensation from the investment company or investment trust for providing investment advisory or investment management services, the trustee must at least annually notify the permissible distributees of the rate and method by which that compensation was determined. The obligation of the trustee to provide the notice described in this section may be waived or modified by the trustor in the trust document or in a separate writing, made at any time, that is delivered to the trustee.
(6) The following transactions, if fair to the beneficiaries, cannot be voided under this section:
(a) An agreement between a trustee and a beneficiary relating to the appointment or compensation of the trustee;
(b) Payment of reasonable compensation to the trustee and any affiliate providing services to the trust, provided total compensation is reasonable;
(c) 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;
(d) A deposit of trust money in a regulated financial-service institution operated by the trustee or its affiliate;
(e) A delegation and any transaction made pursuant to the delegation from a trustee to an agent that is affiliated or associated with the trustee; or
(f) Any loan from the trustee or its affiliate.
(7) 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.
(8) If a trust has two or more beneficiaries, the trustee must act impartially in administering the trust and distributing the trust property, giving due regard to the beneficiaries' respective interests.
