NY Est Pow & Trusts L § 8-1.4 (2021)
2021 New York Laws EPT - Estates, Powers and Trusts Article 8 - Charitable Trusts Part 1 - Rules Governing Charitable Trusts 8-1.4 - Supervision of Trustees for Charitable Purposes

§ 8-1.4 Supervision of trustees for charitable purposes  (a)  For  the  purposes  of  this  section,  "trustee"  means  (1) any individual, group of  individuals,  executor,  trustee,  corporation  or other  legal  entity  holding  and administering property for charitable purposes, whether pursuant to  any  will,  trust,  other  instrument  or agreement,  court  appointment, or otherwise pursuant to law, over which the attorney general has enforcement  or  supervisory  powers,  (2)  any non-profit  corporation  organized  under  the  laws  of  this state for charitable purposes and (3) any non-profit foreign corporation organized for charitable purposes, doing business  or  holding  property  in  this state. Neither a foreign corporation nor a trustee acting under the will of,  or  an  agreement  executed  by, a non-resident of this state shall become subject to the provisions of this section  merely  by  reason  of maintaining  a  bank,  custody,  investment  or  similar account in this state.  (b) The registration and reporting provisions of this section  do  not apply  to  (1)  the United States, any state, territory or possession of the United States, the District of Columbia, the Commonwealth of  Puerto Rico  or  to any of their agencies or governmental subdivisions, (2) any trustee which is required by any other provision  of  law  to  render  a full,  complete  and itemized annual financial report to the congress of the United States or to the legislature of  this  state,  provided  that such  report  contains  the information required of trustees pursuant to this  article,  (3)   corporations   organized   under   the   religious corporations  law  and  other  religious agencies and organizations, and charities, agencies and organizations operated, supervised or controlled by or in connection  with  a  religious  organization,  (4)  educational institutions incorporated under the education law or by special act, (5) any    hospital,   (6)   fraternal,   patriotic,   veterans,   volunteer firefighters, volunteer ambulance workers,  social,  student  or  alumni organizations  and  historical societies chartered by the New York state board of regents, (7) a trust for which there  is  a  corporate  trustee acting  as  sole  trustee  or  co-trustee under the terms of a will of a decedent who died domiciled in a state other than New York  or  a  trust instrument  executed by a non-resident of the state of New York, (8) any trust in which and so long as the charitable  interest  is  deferred  or contingent,  (9)  any  person who, in his or her capacity as an officer, director or trustee of any corporation or organization mentioned in this paragraph, holds property for the religious, educational  or  charitable purposes of such corporation or organization so long as such corporation or organization is registered with the attorney general pursuant to this section,  (10)  any  cemetery  corporation  subject to the provisions of article fifteen of the not-for-profit corporation law,  (11)  the  state parent   teachers   association  and  any  parent  teachers  association affiliated with an  educational  institution  that  is  subject  to  the jurisdiction  of  the  state  education department, (12) any corporation organized under article forty-three of the insurance law. The provisions of this subdivision shall apply only to the registration  and  reporting requirements  of  this  section  and  shall not limit, impair, change or alter  any  other  provision  of  this   article,   the   not-for-profit corporation law or any other provision of law.  (c)  The  attorney  general shall establish and maintain a register of all trustees containing such information as the attorney  general  deems appropriate,  and  to  that end may conduct such investigations as he or she  deems  necessary  and  shall  obtain  from  public  records,  court officers,  taxing  authorities,  trustees  and other sources without the payment  of  any  fee  or  charge,  whatever  information,   copies   of  instruments,  reports  and  records are needed for the establishment and maintenance of the register.  (d)  Every  trustee  shall  file with the attorney general, within six months after any property held by him or her or any income therefrom  is required  to be applied to charitable purposes, a copy of the instrument providing for his or her title, powers and  duties;  provided,  however, that  any  trustee  currently  registered  with  the  department  of law pursuant to article 7-A of the executive law shall  be  deemed  to  have complied  with  this paragraph. If any property held by a trustee or any income therefrom is required to be applied to charitable purposes at the time this section becomes effective, the filing shall be made within six months thereafter.  (e) (1) Whenever any trustee or other person, holding property or  any income  therefrom,  which  may  be required at any time to be devoted to charitable purposes, shall file in any  court  in  this  state  (A)  any petition  for instructions relating to the administration or use of such property or income,  (B)  any  petition  for  the  construction  of  the instrument under which such property or income is held, (C) any petition respecting the disposition or distribution of such property or income or (D)  any  accounting,  due  notice  of the action or proceeding shall be served by the petitioner upon the attorney general together with a  copy of any petition, accounting, will or trust instrument.  (2)  Whenever  any  instrument of a testamentary nature which provides for a disposition for charitable purposes  is  the  subject  of  (A)  an application  for  denial of probate, (B) objections to probate or (C) an application for  approval  of  a  compromise  agreement  in  respect  of probate,  due  notice of the action or proceeding shall be served by the petitioner upon the  attorney  general  together  with  a  copy  of  the instrument and of any such application, objections or agreement.  (f)  (1)  Every  trustee  shall,  in  addition to filing copies of any instrument required under paragraph (d) of this section, file  with  the attorney  general  and  all  identified current charitable beneficiaries written annual financial reports, under penalties for perjury, on  forms prescribed  by the attorney general, setting forth information as to the nature of the assets held for charitable purposes and the administration thereof by the trustee, and shall, file with the  attorney  general  and all   identified  current  charitable  beneficiaries  a  notice  of  the termination of the interest of any party in a trust that would cause all or part of the trust assets to be applied to charitable purposes  or  to have  the  income  therefrom  so  applied,  in accordance with rules and regulations of the attorney general.  (2) Trustees required to report to the attorney general under  article 7-A of the executive law shall comply with this paragraph by filing with the  attorney  general in addition to any other reports required herein, copies of the  financial  reports  required  by  section  172-b  of  the executive law unless such reports have been filed previously.  (g)  Unless the filing of reports is suspended as herein provided, the first report of any trustee shall be filed  no  later  than  six  months after  the  end of the fiscal year of the trustee during which he or she becomes subject to this section.  (h) The attorney general shall make rules  and  regulations  necessary for  the administration of this section, including rules and regulations as to the time for filing reports, the contents thereof, and any  manner of  executing  and filing them, including but not limited to allowing or requiring any submission to the  attorney  general  to  be  effected  by electronic  means  and  electronic  signatures.  He  or she may classify trusts, estates, corporations and other trustees as to  purpose,  nature of  assets,  duration,  amount  of  assets,  amounts  to  be  devoted to  charitable purposes, or otherwise, and may establish different rules for different classes as to time and nature of the reports required, to  the ends  that  he  or she shall receive current financial reports as to all such  trusts,  estates, corporations or other trustees which will enable him or her to ascertain whether they are  being  properly  administered. The attorney general may suspend the filing of financial reports as to a particular  trustee  for a reasonable, specifically designated time upon written application of the trustee, signed under penalties for  perjury, and  filed  with the attorney general and after the attorney general has filed in the register of trustees a written statement that the interests of the beneficiaries will not be prejudiced thereby  and  that  periodic reports  during  the term of such suspension are not required for proper supervision by his or her office. The filing of  the  financial  reports required  by  this  section,  or  the  exemption from such filing or the suspension therefrom, shall not have the effect  of  absolving  trustees from  any  responsibility  for accounting for property or income held by them for charitable purposes. A copy of an account  or  other  financial report  filed by a trustee in any court in this state, if the account or other  financial  report  substantially  complies  with  the  rules  and regulations  of the attorney general, may be filed as a financial report under this section.  (i)  The   attorney   general   may   investigate   transactions   and relationships  of trustees for the purpose of determining whether or not property held for charitable purposes has been  and  is  being  properly administered.  The  attorney general, his or her assistants, deputies or such other officers as may be designated by him or her, are empowered to subpoena  any  trustee,  agent,  fiduciary,  beneficiary,   institution, association  or  corporation  or other witness, examine any such witness under oath and, for this purpose, administer the  necessary  oaths,  and require  the  production of any books or papers which they deem relevant to the inquiry.  (j) No person shall be excused from attending such inquiry pursuant to the mandate of a subpoena, or from producing a paper or  book,  or  from being examined or required to answer a question on the ground of failure of  tender or payment of a witness fee or mileage, unless at the time of such appearance or production, as the case may be, such witness makes  a demand  for such payment as a condition precedent to the offering of the testimony or production required by the subpoena and such payment is not thereupon made. The provisions for payment of a witness fee  or  mileage do not apply to any trustee or other person holding funds for charitable purposes,  or  to  any  person  in  the employ of any such person, whose conduct or practices are being investigated.  (k) If a person subpoenaed to attend such inquiry fails  to  obey  the mandate  of  a  subpoena  without  reasonable  cause,  or if a person in attendance upon such inquiry shall without reasonable cause refuse to be sworn or to be examined or to answer a question or to produce a paper or book when ordered so to do by the officer conducting such inquiry, he or she shall be subject to proceedings under  subdivision  (b)  of  section 2308 of the civil practice law and rules.  (l) The register, copies of the instruments and the reports filed with the  attorney  general  shall  be  open to public inspection, subject to reasonable rules and regulations adopted by the attorney general,  which may  include  such  limitations  as  to  type  of information subject to inspection or purpose of inspection as the attorney general  shall  deem to  be  in the public interest. The attorney general shall withhold from public inspection copies of any report filed with any other governmental agency of this state or of the United States and required by law  to  be kept  confidential  by  such  agency,  and  shall,  upon  request of the  trustee, withhold from public inspection that portion of any  instrument filed  which  does  not  relate  to charitable purposes and which is not otherwise of public record.  (m)  The  attorney  general  may  institute appropriate proceedings to secure  compliance  with  this  section  and  to   secure   the   proper administration  of any trust, corporation or other relationship to which this section applies. The powers and  duties  of  the  attorney  general provided  in this section are in addition to all other powers and duties he or she may have. No court shall modify or terminate  the  powers  and responsibilities  of  any trust, corporation or other trustee unless the attorney general is a party to  the  proceeding,  but  nothing  in  this section shall otherwise impair or restrict the jurisdiction of any court with respect to the matters covered by it. The failure of any trustee to register  or  to  file reports as required by this section may be ground for judicial removal of any person responsible for such failure.  (n) This section shall apply regardless of any contrary provisions  of any  instrument and shall be liberally construed so as to effectuate its general purpose of protecting the public interest  in  charitable  uses, purposes and dispositions.  (o)  Every  officer,  agency,  board  or  commission  of this state or political subdivisions of  this  state  or  agencies  thereof  receiving applications  for exemption from taxation of any trustee subject to this section shall annually file with the attorney  general  a  list  of  all applications  received  during  the  year  and shall notify the attorney general  of  any  suspension  or  revocation  of  a  tax  exempt  status previously granted.  (p)  The  attorney general shall collect from each trustee at the time of filing of the periodic reports required by this section a fee for the filing of such reports as follows:  (1) Twenty-five dollars, if the net worth of the property held by such trustee for charitable purposes is less than fifty thousand dollars,  (2) Fifty dollars if such net worth is fifty thousand dollars or  more but less than two hundred and fifty thousand dollars,  (3)  One  hundred  dollars  if such net worth is two hundred and fifty thousand dollars or more but less than one million dollars,  (4) Two hundred fifty dollars if such net worth is one million dollars or more but less than ten million dollars,  (5) Seven hundred and fifty dollars if such net worth is  ten  million dollars or more but less than fifty million dollars, and  (6)  One  thousand  five  hundred  dollars  if such net worth is fifty million dollars or more.  (q) Any trustee shall be exempt from the annual reporting requirements of this section by filing each year with the attorney general a verified statement executed by such trustee  attesting  that  during  the  annual reporting  period (1) the gross receipts received by said trustee during such annual reporting period were less than twenty-five thousand dollars and that (2) the total assets held by such trustee  at  no  time  during such  annual reporting period exceeded twenty-five thousand dollars. For the purposes of this paragraph, gross receipts mean the  total  received during  the  financial  reporting  period  of  (A)  gifts,  grants,  and contributions; (B) gross income and revenue from all  sources;  and  (C) gross  amounts  from  sales  of  assets, other than inventory; and total assets mean the total principal and the accumulated income, if any, held by such trustee for purposes  of  charitable  distribution  on  any  day during such annual reporting period.  (r)  A  trustee  who fails to comply with paragraph (d), (f) or (g) of this section shall, after notice of said failure served upon him or  her by  the attorney general by certified mail, return receipt requested, be  liable to the state of New York for a fine of ten dollars a day  not  to exceed  one  thousand  dollars  for  each  failure  to  comply after the expiration of the thirty day period following the receipt of the  notice from  the  attorney  general,  except  that  the  time  to comply may be extended by the attorney general. Where the attorney general, after such thirty day period has expired, finds that the  failure  to  comply  with paragraph  (d), (f) or (g) of this section is due to excusable ignorance or inadvertence or other reasonable cause, the  attorney  general  shall waive the fine imposed by this paragraph.  (s)  A trustee shall not be qualified to make application for funds or grants or to receive such funds from any department  or  agency  of  the state  without certifying compliance with paragraphs (d), (f) and (g) of this section and all applicable registration and reporting  requirements of article seven-A of the executive law.