2006 New York Code - Powers And Duties Relating Thereto

 
  § 11-2.2 Power to invest
    (a) Investment of trust funds
    (1)  A  fiduciary  holding funds for investment may invest the same in
  such securities as would be acquired by prudent men  of  discretion  and
  intelligence  in  such  matters  who are seeking a reasonable income and
  preservation of their capital, provided, however, that nothing  in  this
  subparagraph  shall limit the effect of any will, agreement, court order
  or other instrument creating or defining  the  investment  powers  of  a
  fiduciary,  or  shall  restrict  the  authority  of  a  court  of proper
  jurisdiction  to  instruct  the  fiduciary  in  the  interpretation   or
  administration  of  the  express  terms  of any will, agreement or other
  instrument  or  in  the  administration  of  the  property   under   the
  fiduciary's  care. This paragraph shall apply to any investment, made on
  or after  May  first,  nineteen  hundred  seventy,  of  funds  held  for
  investment  by  a  fiduciary,  and  to  all  estates  and  trusts now in
  existence or which may hereafter come into existence.
    A bank, trust company or paid professional investment advisor (whether
  or not registered under any federal securities or investment law)  which
  serves  as a fiduciary, and any other fiduciary representing that it has
  special investment skills shall exercise such diligence in investing the
  funds for which the fiduciary is responsible, as  would  customarily  be
  exercised  by  prudent men of discretion and intelligence having special
  investment skills.
    This paragraph shall apply to any investment, made on or after January
  first, nineteen hundred eighty-six, of the funds held for investment  by
  such a fiduciary and to all estates and trusts now in existence or which
  may hereafter come into existence.
    This  subparagraph shall not apply to any investment, made on or after
  January  first,  nineteen  hundred  ninety-five,  of  funds   held   for
  investment by a fiduciary, and to all estates and trusts in existence or
  which  may  come  into  existence  on  or  after January first, nineteen
  hundred ninety-five.
    (2) A trustee or other person holding trust  funds  may  require  such
  personal  bonds  or  guaranties  of  payment of principal or interest or
  both, or such other bonds or guaranties, to accompany investments as may
  seem prudent, and may from time to time adjust, reduce, modify, postpone
  or compound the same, or any terms and conditions thereof, including the
  rate of interest, or any installments  thereof,  and  may  at  any  time
  release  the  same, and all premiums paid on such guaranties or fees for
  servicing mortgages may be charged to or paid out  of  income,  provided
  that  such charge or payment is not more than at the rate of one-half of
  one per centum per annum on the par value of such  investments.  But  no
  trustee shall purchase securities hereunder from himself.
    (3)  Whenever  a  trustee  or  other  person  holding  trust funds has
  heretofore lawfully invested or  shall  hereafter  lawfully  invest  any
  trust  funds  in  a  share  or  part  of a bond and mortgage or any part
  interest therein or shall hold any such share, part or part interest  by
  apportionment,  transfer,  representation  or otherwise, if the property
  subject to such mortgage is purchased pursuant to  foreclosure  sale  or
  acquired  by  voluntary  conveyance  by  or in behalf of such trustee or
  other person holding trust funds and another person,  including  another
  such  trustee,  owning another such share, part or part interest in such
  bond and mortgage, such trustee or other person holding trust funds or a
  person purchasing or acquiring title  in  behalf  of  such  trustee  may
  convey  the  undivided  interest  in  such real property so purchased or
  acquired to a corporation, formed for  the  purpose  of  acquiring  such
  property,  in exchange for a proportionate part of the capital stock and
  the bonds, if any, of such corporation; provided that the other  person,
  by  or  in  whose  behalf  such property has been purchased or acquired,
  shall  exchange  his  undivided  interest  in  such   property   for   a
  proportionate  part  of the capital stock and the bonds, if any, of such
  corporation, issued in exchange for such real property.
    (4)  The  corporation formed, as provided in subparagraph (3), for the
  acquisition of such real property shall be a business  corporation,  and
  shall  have  all  the powers of such a corporation, and its stockholders
  shall have the same power to vote to  authorize  or  confirm  any  sale,
  mortgage,  lease,  option  or  other  disposition  of  any or all of its
  property that is ordinarily possessed  by  shareholders  of  a  business
  corporation;  provided,  however,  that the certificate of incorporation
  shall  prohibit  it  from  investing  in  any  stocks,  bonds  or  other
  securities,  which are not under the laws of this state a proper subject
  for the investment of trust funds, and shall provide that upon the  sale
  of  the real property acquired by the corporation such corporation shall
  be dissolved. Such dissolution shall be effectuated by proceedings under
  article 10 of the business corporation law to be  taken  promptly  after
  such  sale;  provided,  however, that if any such corporation shall sell
  real property held by it for a consideration consisting in whole  or  in
  part  of  evidences  of  indebtedness secured by mortgage upon such real
  property or shall reacquire  such  property  upon  foreclosure  of  such
  mortgage,  in  either of such events, such dissolution proceedings shall
  not be required to be taken until  final  liquidation  in  cash  by  the
  corporation of its entire interest in or lien upon such real property.
    (5)  Nothing  contained  in  this  section,  however, shall affect any
  lawful investments in shares, parts  or  part  interests  in  bonds  and
  mortgages  heretofore  made by any trustee or other person holding trust
  funds  for  investment,  nor  affect  any  action  heretofore  taken  in
  accordance  with law with respect to such bonds and mortgages or shares,
  parts or part interests in such bonds and  mortgages.  Such  trustee  or
  other  person  holding  trust  funds  for  investment shall have all the
  powers heretofore possessed under this section or any other provision of
  law with respect to part  interests  in  bonds  and  mortgages  for  the
  protection  and  preservation of the trust property. It is the intention
  of this section to prohibit any future investments in part interests  in
  bonds,  or  notes,  and mortgages for any estate or fund, for which such
  trustee or other person may hold funds for investment.
    (6) A fiduciary holding  funds  for  investment  who  is  directed  or
  authorized  by  an  instrument  creating  the  fiduciary relationship to
  retain the stock of a bank or trust company that is a member of  a  bank
  holding  company  currently  fully  registered  under an act of Congress
  entitled "Bank Holding Company Act of l956", as the same may be  amended
  from  time  to time, shall be considered as being directed or authorized
  to retain the stock of such bank holding  company.  Notwithstanding  any
  contrary  provision in this section, this subdivision shall apply to any
  fiduciary relationship now in existence or which may hereafter come into
  existence and to all investments now held  or  which  may  hereafter  be
  acquired in such relationship.
    (7)  No fiduciary holding funds for investment shall be liable for any
  loss incurred with respect to any investment not eligible by law for the
  investment of trust funds, if such ineligible investment was received by
  such fiduciary pursuant to a decree of court or the terms of  the  will,
  deed,  or  other  instrument  creating the fiduciary relationship, or if
  such ineligible investment  was  eligible  when  received  or  when  the
  investment  was made by the fiduciary; provided such fiduciary exercises
  due care and prudence in  the  disposition  or  retention  of  any  such
  ineligible investment.
    (8)  Investment  by a fiduciary in a limited partnership or investment
  trust, as defined in 9-1.5 of this chapter, shall not be deemed to be an
  improper delegation of investment authority.
    (9) As used in this paragraph, the phrase "person holding trust funds"
  and   the   terms   "fiduciary"   and   "trustee"   include  a  personal
  representative, trustee, guardian, a donee of a power  during  minority,
  committee  of  the property of an incompetent person, and conservator of
  the property of a conservatee.
    (b) Rights of  fiduciaries  to  invest  in  securities  of  investment
  companies.
    (1)  A  fiduciary  holding funds for investment may invest the same in
  securities of any management type investment company or trust registered
  pursuant to the federal  investment  company  act  of  nineteen  hundred
  forty,  as  amended,  in  any  case  in  which  a court order, the will,
  agreement or other instrument creating or defining the investment powers
  of the fiduciary authorizes the investment of such funds  in  either  of
  the  following:  (A)  Such  investments  as  the  fiduciary  may, in his
  discretion, select. (B) Generally in investments  other  than  those  in
  which   fiduciaries  are  by  law  authorized  to  invest  trust  funds,
  notwithstanding that the fiduciary or an affiliate of the fiduciary acts
  as investment advisor, custodian, transfer  agent,  registrar,  sponsor,
  distributor,  manager  or  provides  other  services  to  the investment
  company or trust. Unless the will, lifetime trust  or  order  appointing
  the  fiduciary  provides  otherwise,  the fiduciary shall elect annually
  either (i) to receive or have its  affiliate  receive  compensation  for
  providing  such  services  to  such  investment company or trust for the
  portion of the trust invested in such investment  company  or  trust  or
  (ii) to take annual corporate trustees' commissions with respect to such
  portion.
    This  subparagraph shall not apply to any investment, made on or after
  January  first,  nineteen  hundred  ninety-five,  of  funds   held   for
  investment by a fiduciary, and to all estates and trusts in existence or
  which  may  come  into  existence  on  or  after January first, nineteen
  hundred ninety-five.
    (1-a) In any case in which a court order,  will,  agreement  or  other
  instrument  creating  or defining the investment powers of the fiduciary
  directs, requires or authorizes that the funds held  for  investment  be
  invested  in  United  States  government  obligations, the fiduciary may
  invest such funds in securities of, or other interests in, any  open-end
  or  closed-end  management  type  investment company or investment trust
  registered pursuant to the federal investment company  act  of  nineteen
  hundred   forty,  as  amended,  provided  that  the  portfolio  of  such
  investment company or investment  trust  is  limited  to  United  States
  government  obligations or to repurchase agreements fully collateralized
  by such obligations and provided further that such investment company or
  investment trust shall take delivery of such collateral, either directly
  or through an authorized custodian.
    (2) As used  in  this  paragraph,  the  term  "fiduciary"  includes  a
  personal representative, trustee, guardian, committee of the property of
  an incompetent and conservator of the property of a conservatee.