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  § 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.

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