205 ILCS 620/2-8
2021 Illinois Compiled Statutes|Chapter 205 - FINANCIAL REGULATION|205 ILCS 620/ - Corporate Fiduciary Act.|Article II - Certificate of Authority and Organization

 (from Ch. 17, par. 1552-8)Sec. 2-8.     Collateralizing fiduciary assets.(a) A corporate fiduciary shall not be required and shall not have the power  to collateralize or secure fiduciary funds except as provided in this Section.(b) All funds, both principal and income, deposited with or held in a  fiduciary capacity by any corporate fiduciary awaiting investment or  distribution, and not otherwise subject to direction regarding investment or  non-investment, shall to the extent reasonable under existing circumstances, be  prudently invested for the beneficiaries at a rate of return commensurate with  that available on trust quality investments.(c) Funds, both principal and income awaiting investment or distribution,  may be deposited in deposit accounts or other investment vehicles of the  corporate fiduciary, or of any affiliate of the corporate fiduciary; and funds,  both principal and income awaiting investment or distribution which need not be  invested hereunder for the beneficiaries may be commingled with the corporate  fiduciary's own funds and used by the corporate fiduciary in the conduct of its  business, provided that in either case the following apply:(1) The corporate fiduciary or, in the case of the     deposit in an affiliate, such affiliate shall set aside in the corporate fiduciary or affiliate, as the case may be, as collateral, securities of the classes in which corporate fiduciaries are authorized to invest trust funds under  the laws of the State of Illinois.(2) The market value of the collateral may not be     less than 100% of the amount commingled or deposited.(3) No collateral shall be required or authorized if     the deposit is made solely at the direction and determination of the settlor, beneficiary or other person, other than the corporate fiduciary, having the right to direct investment of funds.(4) No collateral shall be required or authorized     with respect to any part of such deposit which is insured by the Federal Deposit Insurance Corporation.(d) Funds shall not be held commingled and uninvested or undistributed for  an account any longer than is reasonable under existing circumstances for the  proper management of the account.(e) The collateralization required in this Section is not required or  authorized if the corporate fiduciary or affiliate has in force a surety bond  meeting the requirements of this Section if it is in a form approved by the  Commissioner and if it indemnifies the owners, settlors, or beneficiaries of  funds held in a fiduciary capacity against loss due to the failure of the  corporate fiduciary or affiliate and is issued by a licensed insurance company  authorized to transact business in the State that has been approved by the  Commissioner for the purpose of issuing surety bonds under this Section.  A  corporate fiduciary or affiliate may also satisfy the requirements of this  Section by a combination of a surety bond and collateralization as provided in  this Section.(f) In the event of the failure of the corporate fiduciary or affiliate in  which the corporate fiduciary has made a deposit or commingled funds, the  owners  of the fiduciary funds shall have a first lien, to the extent of their  interest in such funds, on the cash and securities used as collateral hereunder  or the surety bond in addition to their claim against the estate of the  corporate fiduciary.     (Source: P.A. 88-636, eff. 9-9-94; P.A. 88-662, eff. 9-16-94; 89-364, eff.  8-18-95.)