2023 New York Laws › EPT - Estates, Powers and Trusts › Article 11 - Fiduciary: Powers, Duties and Limitations; Actions by or Against in Representative or Individual Capacities › Part 2 - Investments by Fiduciaries: Powers and Duties Relating Thereto › 11-2.2 - Power to Invest

§ 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.