2006 Alabama Code - Section 19-3-322 — Powers of trustee.

Unless otherwise expressly limited in the trust instrument, or by an order of court, a trustee may, acting as a prudent person would in light of the purpose of the trust, perform any or all of the following acts:

(1) Receive (subject to the trustee's approval), collect, hold and retain for such time as the trustee shall deem advisable, property, real or personal, including property in which the trustee or any related party is personally interested. The trustee is specifically authorized to receive, collect, hold, and retain common or preferred stock or other interest in the trustee or any related party. In the absence of an express provision to the contrary in a trust instrument, a trustee may without liability continue to hold property received into an account at its inception or subsequently added to it or acquired pursuant to proper authority if and as long as the trustee, in the exercise of good faith and of reasonable prudence, may consider that retention to be in the best interest of the account or in furtherance of the purposes of the trust. Such property may include, among other things, stock in the trustee if a trustee entity, and stock in any related party;

(2) Sell, purchase, exchange, execute options for, partition, or otherwise dispose of or acquire, any property or interest therein which the trustee may hold from time to time, at public or private sale or otherwise, including such transactions with or involving any related party as principal or agent, upon such terms and conditions, including credit, and for such consideration as the trustee shall deem advisable, including reasonable compensation for any such related party, and to transfer and convey the property or interest therein which is at the disposal of the trustee, in fee simple absolute or otherwise free of all trust; provided that the trustee or the related party discloses to the current beneficiary in any reasonable manner (including by confirmation, account statement, prospectus, or otherwise) the terms of the transaction, including any fee paid to the related party. For purposes of the immediately preceding sentence, compensation charged by or paid to a related party shall be conclusively presumed to be reasonable if such compensation is consistent with any standard fee table maintained by the related party in the ordinary course of business;

(3) Invest and reinvest the trust assets in securities, investments and other property which are authorized as investments for trust assets under Section 19-3-120, or under any other applicable statute or law, and, in addition to such securities, investments and other property, to invest and reinvest the trust assets in any and all other kinds of securities, investments and other property, without regard to type or classification, subject only to compliance in connection with the selection of such securities, investments and other investments with the standards of prudence applicable under Section 19-3-120.2, or if such statute is not applicable to the trust, under the provisions of such other applicable provision of law. Nothing contained in this article shall, insofar as such authorization may be prohibited by the Constitution of this state, authorize the investment of trust assets in the stock of any private corporation;

(4) Continue or participate in the operation of any business or other enterprise in which the trust owns an interest and to effect incorporation, dissolution, or other change in the form of the organization of the business or enterprise;

(5) Acquire or dispose of an asset for cash or on credit at a public or private sale; manage, develop, improve, exchange, partition, change the character of, or abandon a trust asset or any interest in it; encumber, mortgage, or pledge a trust asset for a term within or extending beyond the term of the trust in connection with the exercise of any power vested in the trustee;

(6) Make ordinary or extraordinary repairs or alterations in buildings or other structures; demolish any improvements; or raze existing or erect new party walls or buildings;

(7) Subdivide, develop, or dedicate land to public use; make or obtain the vacation of plats and adjust boundaries; adjust differences in valuation on exchange or partition by giving or receiving consideration; or dedicate easements to public use without consideration;

(8) Enter for any purpose into a lease as lessor or lessee with or without option to purchase or renew for a term within or extending beyond the term of the trust;

(9) Enter into a lease or arrangement for exploration and removal of minerals or other natural resources or enter into a pooling or unitization agreement;

(10) Grant an option involving disposition of a trust asset or take an option for the acquisition of any asset;

(11) Pay from income or principal, as determined in accordance with the provisions of Article 12 of Chapter 3 of Title 19, or other applicable provisions of law, any and all expenses reasonably necessary for the administration of the trust including interest, taxes, insurance premiums, assessments, agents' fees or compensation, trustees' fees or compensation, including additional fees for extraordinary services and, fees to related parties, and other expenses incurred in the collection, care, administration, and protection of the trust estate;

(12) Receive additional property from any source and to administer the additional property as a portion of the appropriate trust estate under the management of the trustee, provided that the trustee shall not be required to receive additional property without the trustee's consent;

(13) Deposit funds in a bank or other financial institution, including in a separate department of the trustee or in any related party;

(14) Borrow money for such periods of time and upon such terms and conditions as to rates, maturities, renewals, and security as the trustee shall deem advisable, including the power to borrow from any related party, for the purpose of paying debts, taxes, or other charges against the trust or any part thereof, for the purchase of any authorized asset, for the operation of any business enterprise, or for any other need to achieve the purpose of the trust, in any form; and to mortgage, pledge, or otherwise encumber such portion of the trust estate as may be required to secure the loan or loans; and to renew existing loans;

(15) Make advances for the benefit or protection of the trust and for any or all expenses, losses and liabilities sustained in the administration of the trust or as a result of the holding or ownership of any asset by the trust, for which advances the trustee shall be entitled to receive interest at any commercially reasonable rate of interest set by the trustee and which advances, together with interest, shall constitute a lien on the trust assets as against the beneficiaries;

(16) Vote shares of stock or other securities, in person or by special, limited, or general proxy, with or without power of substitution, or to determine to not vote such shares of stock or other securities;

(17) Hold any security at a qualified depository in the name of a nominee or in other form without disclosure of the fiduciary relationship, so that title to the security may pass by delivery; but the trustee shall be liable for any act of the nominee in connection with the security so held;

(18) Exercise all options, rights, and privileges to convert stocks, bonds, debentures, notes, mortgages, or other property into other stocks, bonds, debentures, notes, mortgages, or other property, and to subscribe for other or additional stocks, bonds, debentures, notes, mortgages, or other property so acquired as investments of the trust so long as the trustee shall deem advisable;

(19) Unite with other owners of property in carrying out any plans for the consolidation or merger, dissolution or liquidation, foreclosure, lease, or sale of the property or the incorporation or re-incorporation, reorganization or readjustment of the capital or financial structure of any corporation, partnership, company, or association, the securities of which may form any portion of the trust estate; to become and serve as a member of a stockholders' or bondholders' protective committee; to deposit securities in accordance with any plan agreed upon; to pay any assessments, expenses, or sums of money that may be required for the protection or furtherance of the interest of the beneficiaries of any trust with reference to any such plan; and to receive as investments of a trust any securities issued as a result of the execution of such plan;

(20) Modify the interest rate from time to time on any obligation, whether secured or unsecured, constituting a part of any trust;

(21) Continue any obligation, whether secured or unsecured, upon and after maturity, with or without renewal or extension, upon such terms as the trustee shall deem advisable, without regard to the value of the security, if any, at the time of the continuance;

(22) Effect a fair and reasonable compromise with any debtor or obligor, or extend, renew, or in any manner modify the terms of any obligation owing to the estate. If the trustee holds a mortgage, pledge, or other lien upon property of another person, the trustee may, in lieu of foreclosure, accept a conveyance or transfer of encumbered assets from the owner thereof in satisfaction of the indebtedness secured by the lien;

(23) Carry such insurance coverage, including public liability, for such hazards and in such amounts, either in stock companies or in mutual companies, as the trustee shall deem advisable in connection with holding and administering the trust estate, including to insure the trust assets and to insure the trustee against liability, and to pay the premiums for such insurance;

(24) In the discretion of the trustee, resign as trustee by giving not less than thirty days' written notice to the adult current beneficiaries, or if none then a court of competent jurisdiction, who shall appoint the successor trustee. If no successor is appointed by the adult current beneficiaries within the thirty-day notice period, the trustee may petition a court of competent jurisdiction to appoint a successor trustee. The successor trustee shall not be liable for the actions or inactions of any prior trustee;

(25) Institute and defend any and all suits or legal proceedings related to said trust estate, in any jurisdiction; and to employ counsel, expert witnesses or other agents; and to compromise, adjust, submit to arbitration, bring or defend actions on, abandon, or otherwise deal with and settle any dispute or claim in favor of or against the trust estate as the trustee shall deem advisable (the trustee's decision shall be conclusive between the trustee and the beneficiaries of the trust and the person against or for whom the dispute or claim is asserted, in the absence of fraud by such persons, and, in the absence of fraud, bad faith, or gross negligence of the trustee, shall be conclusive between the trustee and the beneficiaries of the trust);

(26) Employ and compensate, out of income or principal, or both, and in such proportion as the trustee shall deem advisable (subject to any applicable requirements of Article 12 of Chapter 3 of Title 19), persons deemed by the trustee needful to advise or assist in the proper management and administration of the trust, including, but not limited to, agents, auditors (including public accountants, certified public accountants or internal auditors), brokers, attorneys-at-law, attorneys-in-fact, investment bankers, investment advisors, rental agents, realtors, appraisers, and tax specialists (including any related party, so long as the relationship and the fees charged are reasonable and disclosed in any reasonable manner to the current beneficiaries); and to do so without liability for any neglect, omission, misconduct, or default of the agent or representative, provided the trustee acted as a prudent person in selecting and monitoring the agent or representative. For purposes of the immediately preceding sentence, compensation charged by or paid to a related party shall be conclusively presumed to be reasonable if such compensation is consistent with any standard fee table maintained by the related party in the ordinary course of business;

(27) Acquire, receive, hold, and retain undivided the principal of several trusts created by a single instrument until division shall become necessary in order to make distributions; to hold, manage, invest, reinvest, and account for the several shares or parts of shares by appropriate entries in the trustee's books of account and to allocate to each share or part of share its proportionate part of all receipts and expenses; provided, however, that this subdivision shall not defer the vesting in possession of any share or part of share of the trust estate;

(28) Make distribution of principal assets of the trust in kind or in cash, or partially in kind and partially in cash, in divided or undivided interests, as the trustee finds to be most practicable and for the best interests of the distributees, and the trustee may distribute types of assets differently among the distributees; and to determine the value of principal assets for the purpose of making distribution thereof if and when there is more than one distributee thereof, which determination shall be binding upon the distributees unless clearly capricious, erroneous, and inequitable;

(29) Make payments in money, or in property in lieu of money, to or for the benefit of a minor or incompetent in any one or more of the following ways:

a. Directly to the minor or incompetent;

b. Directly in payment for the support, care, maintenance, education, and medical, surgical, hospital, or other institutional care of the minor or incompetent;

c. To the legal or natural guardian of the minor or incompetent; or

d. To any other person, whether or not appointed guardian of the person by any court, who shall, in fact, have the care and custody of the person of the minor or incompetent. The trustee shall not be under any duty to see to the application of the payments so made if the trustee acted as a prudent person in the selection of the person, including the minor or incompetent, to whom the payments were made; and the receipt of the person shall be full acquittance to the trustee;

(30) Allocate items of income or expense to either trust income or principal, as determined in accordance with the provisions of Article 12 of Chapter 3 of Title 19, or other applicable provisions of law, including creation of proper and reasonable reserves for taxes, assessments, insurance premiums, depreciation, obsolescence or amortization, depletion in minerals or timber properties, repairs, improvements, and general maintenance of buildings or other property; and

(31) Make contracts and to execute deeds and instruments, under seal or otherwise, as may be necessary in the exercise of the powers granted in this article.

(Acts 1995, No. 95-310, p. 571, §3.)