N.Y. EPT Law § 11-2.2 — New York Code / Act EPT / Article 11 / Part 2 / Section 11-2.2
Power to invest
Status: in_force

§ 11-2.2 Power to invest\n  (a) Investment of trust funds\n  (1) A fiduciary holding funds for investment may invest the same in\nsuch securities as would be acquired by prudent men of discretion and\nintelligence in such matters who are seeking a reasonable income and\npreservation of their capital, provided, however, that nothing in this\nsubparagraph shall limit the effect of any will, agreement, court order\nor other instrument creating or defining the investment powers of a\nfiduciary, or shall restrict the authority of a court of proper\njurisdiction to instruct the fiduciary in the interpretation or\nadministration of the express terms of any will, agreement or other\ninstrument or in the administration of the property under the\nfiduciary's care. This paragraph shall apply to any investment, made on\nor after May first, nineteen hundred seventy, of funds held for\ninvestment by a fiduciary, and to all estates and trusts now in\nexistence or which may hereafter come into existence.\n  A bank, trust company or paid professional investment advisor (whether\nor not registered under any federal securities or investment law) which\nserves as a fiduciary, and any other fiduciary representing that it has\nspecial investment skills shall exercise such diligence in investing the\nfunds for which the fiduciary is responsible, as would customarily be\nexercised by prudent men of discretion and intelligence having special\ninvestment skills. This paragraph shall apply to any investment, made on\nor after January first, nineteen hundred eighty-six, of the funds held\nfor investment by such a fiduciary and to all estates and trusts now in\nexistence or which may hereafter come into existence.\n  This subparagraph shall not apply to any investment, made on or after\nJanuary first, nineteen hundred ninety-five, of funds held for\ninvestment by a fiduciary, and to all estates and trusts in existence or\nwhich may come into existence on or after January first, nineteen\nhundred ninety-five.\n  (2) A trustee or other person holding trust funds may require such\npersonal bonds or guaranties of payment of principal or interest or\nboth, or such other bonds or guaranties, to accompany investments as may\nseem prudent, and may from time to time adjust, reduce, modify, postpone\nor compound the same, or any terms and conditions thereof, including the\nrate of interest, or any installments thereof, and may at any time\nrelease the same, and all premiums paid on such guaranties or fees for\nservicing mortgages may be charged to or paid out of income, provided\nthat such charge or payment is not more than at the rate of one-half of\none per centum per annum on the par value of such investments. But no\ntrustee shall purchase securities hereunder from himself.\n  (3) Whenever a trustee or other person holding trust funds has\nheretofore lawfully invested or shall hereafter lawfully invest any\ntrust funds in a share or part of a bond and mortgage or any part\ninterest therein or shall hold any such share, part or part interest by\napportionment, transfer, representation or otherwise, if the property\nsubject to such mortgage is purchased pursuant to foreclosure sale or\nacquired by voluntary conveyance by or in behalf of such trustee or\nother person holding trust funds and another person, including another\nsuch trustee, owning another such share, part or part interest in such\nbond and mortgage, such trustee or other person holding trust funds or a\nperson purchasing or acquiring title in behalf of such trustee may\nconvey the undivided interest in such real property so purchased or\nacquired to a corporation, formed for the purpose of acquiring such\nproperty, in exchange for a proportionate part of the capital stock and\nthe bonds, if any, of such corporation; provided that the other person,\nby or in whose behalf such property has been purchased or acquired,\nshall exchange his undivided interest in such property for a\nproportionate part of the capital stock and the bonds, if any, of such\ncorporation, issued in exchange for such real property.\n  (4) The corporation formed, as provided in subparagraph (3), for the\nacquisition of such real property shall be a business corporation, and\nshall have all the powers of such a corporation, and its stockholders\nshall have the same power to vote to authorize or confirm any sale,\nmortgage, lease, option or other disposition of any or all of its\nproperty that is ordinarily possessed by shareholders of a business\ncorporation; provided, however, that the certificate of incorporation\nshall prohibit it from investing in any stocks, bonds or other\nsecurities, which are not under the laws of this state a proper subject\nfor the investment of trust funds, and shall provide that upon the sale\nof the real property acquired by the corporation such corporation shall\nbe dissolved. Such dissolution shall be effectuated by proceedings under\narticle 10 of the business corporation law to be taken promptly after\nsuch sale; provided, however, that if any such corporation shall sell\nreal property held by it for a consideration consisting in whole or in\npart of evidences of indebtedness secured by mortgage upon such real\nproperty or shall reacquire such property upon foreclosure of such\nmortgage, in either of such events, such dissolution proceedings shall\nnot be required to be taken until final liquidation in cash by the\ncorporation of its entire interest in or lien upon such real property.\n  (5) Nothing contained in this section, however, shall affect any\nlawful investments in shares, parts or part interests in bonds and\nmortgages heretofore made by any trustee or other person holding trust\nfunds for investment, nor affect any action heretofore taken in\naccordance with law with respect to such bonds and mortgages or shares,\nparts or part interests in such bonds and mortgages. Such trustee or\nother person holding trust funds for investment shall have all the\npowers heretofore possessed under this section or any other provision of\nlaw with respect to part interests in bonds and mortgages for the\nprotection and preservation of the trust property. It is the intention\nof this section to prohibit any future investments in part interests in\nbonds, or notes, and mortgages for any estate or fund, for which such\ntrustee or other person may hold funds for investment.\n  (6) A fiduciary holding funds for investment who is directed or\nauthorized by an instrument creating the fiduciary relationship to\nretain the stock of a bank or trust company that is a member of a bank\nholding company currently fully registered under an act of Congress\nentitled "Bank Holding Company Act of l956", as the same may be amended\nfrom time to time, shall be considered as being directed or authorized\nto retain the stock of such bank holding company. Notwithstanding any\ncontrary provision in this section, this subdivision shall apply to any\nfiduciary relationship now in existence or which may hereafter come into\nexistence and to all investments now held or which may hereafter be\nacquired in such relationship.\n  (7) No fiduciary holding funds for investment shall be liable for any\nloss incurred with respect to any investment not eligible by law for the\ninvestment of trust funds, if such ineligible investment was received by\nsuch fiduciary pursuant to a decree of court or the terms of the will,\ndeed, or other instrument creating the fiduciary relationship, or if\nsuch ineligible investment was eligible when received or when the\ninvestment was made by the fiduciary; provided such fiduciary exercises\ndue care and prudence in the disposition or retention of any such\nineligible investment.\n  (8) Investment by a fiduciary in a limited partnership or investment\ntrust, as defined in 9-1.5 of this chapter, shall not be deemed to be an\nimproper delegation of investment authority.\n  (9) As used in this paragraph, the phrase "person holding trust funds"\nand the terms "fiduciary" and "trustee" include a personal\nrepresentative, trustee, guardian, a donee of a power during minority,\ncommittee of the property of an incompetent person, and conservator of\nthe property of a conservatee.\n  (b) Rights of fiduciaries to invest in securities of investment\ncompanies.\n  (1) A fiduciary holding funds for investment may invest the same in\nsecurities of any management type investment company or trust registered\npursuant to the federal investment company act of nineteen hundred\nforty, as amended, in any case in which a court order, the will,\nagreement or other instrument creating or defining the investment powers\nof the fiduciary authorizes the investment of such funds in either of\nthe following: (A) Such investments as the fiduciary may, in his\ndiscretion, select. (B) Generally in investments other than those in\nwhich fiduciaries are by law authorized to invest trust funds,\nnotwithstanding that the fiduciary or an affiliate of the fiduciary acts\nas investment advisor, custodian, transfer agent, registrar, sponsor,\ndistributor, manager or provides other services to the investment\ncompany or trust. Unless the will, lifetime trust or order appointing\nthe fiduciary provides otherwise, the fiduciary shall elect annually\neither (i) to receive or have its affiliate receive compensation for\nproviding such services to such investment company or trust for the\nportion of the trust invested in such investment company or trust or\n(ii) to take annual corporate trustees' commissions with respect to such\nportion.\n  This subparagraph shall not apply to any investment, made on or after\nJanuary first, nineteen hundred ninety-five, of funds held for\ninvestment by a fiduciary, and to all estates and trusts in existence or\nwhich may come into existence on or after January first, nineteen\nhundred ninety-five.\n  (1-a) In any case in which a court order, will, agreement or other\ninstrument creating or defining the investment powers of the fiduciary\ndirects, requires or authorizes that the funds held for investment be\ninvested in United States government obligations, the fiduciary may\ninvest such funds in securities of, or other interests in, any open-end\nor closed-end management type investment company or investment trust\nregistered pursuant to the federal investment company act of nineteen\nhundred forty, as amended, provided that the portfolio of such\ninvestment company or investment trust is limited to United States\ngovernment obligations or to repurchase agreements fully collateralized\nby such obligations and provided further that such investment company or\ninvestment trust shall take delivery of such collateral, either directly\nor through an authorized custodian.\n  (2) As used in this paragraph, the term "fiduciary" includes a\npersonal representative, trustee, guardian, committee of the property of\nan incompetent and conservator of the property of a conservatee.\n