2023 Vermont Statutes › Title 8 - Banking and Insurance › Chapter 77 - Independent Trust Companies › § 2409. Financial transactions

§ 2409. Financial transactions
(a) No assets held in a fiduciary capacity shall be mingled with the investments of the independent trust company or be liable for the debts or obligations of the independent trust company. Independent trust companies shall keep all monies, property, or securities held separate and apart from the assets of the company and all assets held by the independent trust company as a fiduciary shall be designated in a manner that the owner, trust, or estate to which such assets belong may be clearly identified.
(b) Consistent with its fiduciary obligations, every independent trust company holding funds awaiting investment or distribution may deposit or leave on deposit such funds with a federally insured state or national bank. The funds shall not be deposited or left with the same corporation or association depositing or leaving on deposit such funds, nor with a corporation or association holding or owning a majority of the capital stock of or other voting interest in the independent trust company making or leaving the deposit, unless the corporation or association shall first pledge, as security for the deposit, securities eligible for investment by state banks that have a market value equal to that of the deposited funds. No security shall be required with respect to any portion of such deposits which are insured under the provisions of any law of the United States.
(c) An independent trust company acting in any capacity under a trust, unless the instrument creating the trust provides otherwise, may cause any securities or other property held by it in its representative capacity to be registered in the name of a nominee or nominees of the independent trust company.
(d) An independent trust company when acting as depositary or custodian for the personal representative of a trust, unless the instrument creating the trust provides otherwise, may with the consent of the personal representative of the trust, cause any securities or other property held by it to be registered in the name of a nominee or nominees of the independent trust company.
(e) An independent trust company shall be liable for any loss occasioned by the acts of any of its nominees with respect to securities or other property registered under subsections (c) and (d) of this section.
(f) No corporation or the registrar or transfer agent thereof shall be liable for registering or causing to be registered upon the books of the corporation any securities in the name of any nominee of an independent trust company or for transferring or causing to be transferred upon the books of the corporation any securities theretofore registered by the corporation in the name of any nominee of an independent trust company, as provided in this section, when the transfer is made on the authorization of the nominee.
(g) In its discretion, and subject to provisions of subsection (h) of this section, an independent trust company may associate together for common investment the funds of individual trusts held by it whether created by order of court or otherwise, if the terms of the trust do not require a separate investment. Without limiting the generality of the foregoing, an independent trust company may collectively invest funds received or held as fiduciary as follows:
(1) in a common trust fund maintained by the independent trust company exclusively for the collective investment and reinvestment of monies contributed thereto by the independent trust company in its capacity as executor, administrator, guardian, or trustee under a will or deed;
(2) in a fund consisting solely of assets of retirement, pension, profit sharing, stock bonus, or other trusts which are exempt from federal income taxation under the Internal Revenue Code; or
(3) in a common trust fund, maintained by the independent trust company exclusively for the collective investment and reinvestment of monies contributed thereto by the independent trust company in its capacity as managing agent.
(h) An independent trust company may create a trust investment account to which may be entrusted for investment the whole or any part of the funds of trust permissible to be associated as provided in subsection (g) of this section. Where an independent trust company which has established an associated trust investment account is the cotrustee of a trust permissible to be associated as provided in subsection (g) of this section, the whole or any part of the funds of the trust may be entrusted to that account for investment if all cotrustees of the trust consent thereto. An individual trust whose funds are thus associated shall at all times be the equitable owner of its pro rata share of the funds of the associated trust investment account and shall share pro rata the net income of that account and the net increase or decrease of its principal for any reason during the time its funds are a part of the associated trust investment account. The net income shall be distributed pro rata to the individual trust accounts at reasonable intervals. Funds of individual trusts transferred to that account or withdrawn therefrom shall be on the basis of the market value of the total funds of the account at the time being.
(i) The board or similarly functioning unit of a limited liability company of an independent trust company is responsible for the proper exercise of fiduciary powers by the independent trust company and each matter pertinent to the exercise of fiduciary powers. The board shall adopt and follow written policies and procedures adequate to maintain its fiduciary activities in compliance with applicable law. The policies and procedures shall include, for the company and its directors, officers, managers, members, employees, and agents, methods for preventing conflicts of interest, self-dealing, and the improper use of material inside information in connection with any decision or recommendation made as a fiduciary. The written policies and procedures shall also prescribe the investment and disposition of property held in a fiduciary capacity. (Added 1997, No. 98 (Adj. Sess.), § 8b.)