(a) Unless otherwise authorized or directed by the court having jurisdiction thereof, or by the will, trust agreement or other document which is the source of authority, a trustee, executor, administrator, guardian or one acting in any other fiduciary capacity, other than as a trustee governed by the Alabama Uniform Trust Code, with the exercise of reasonable business prudence, in addition to any other investments now permitted by law, may invest funds in securities or investments which, at the time of the making or purchase thereof, are included in one or more of the following classes:

will 560x170

Ask a will, trust or estate question, get an answer ASAP!
Thousands of highly rated, verified estate & trust lawyers.
Click here to chat with a lawyer about your rights.

Terms Used In Alabama Code 19-3-120

  • Appraisal: A determination of property value.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Deed: The legal instrument used to transfer title in real property from one person to another.
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Executor: A male person named in a will to carry out the decedent
  • Federal Deposit Insurance Corporation: A government corporation that insures the deposits of all national and state banks that are members of the Federal Reserve System. Source: OCC
  • Fiduciary: A trustee, executor, or administrator.
  • following: means next after. See Alabama Code 1-1-1
  • Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • person: includes a corporation as well as a natural person. See Alabama Code 1-1-1
  • preceding: means next before. See Alabama Code 1-1-1
  • state: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Alabama Code 1-1-1
  • Statute: A law passed by a legislature.
  • Trustee: A person or institution holding and administering property in trust.
  • United States: includes the territories thereof and the District of Columbia. See Alabama Code 1-1-1
(1) Bonds or other interest-bearing obligations of the United States of America, or payment of which the United States of America has guaranteed as to both principal and interest.
(2) Bonds issued by the Federal Land Bank, under the act of Congress of the United States of America, designated as “the Federal Farm Loan Act,” and acts amendatory thereof.
(3) Bonds or other interest-bearing obligations of any state of the United States of America.
(4) General obligation bonds pledging the full faith and credit, of any county of the State of Alabama which county for a period of five years next preceding the purchase of the bonds shall not have made default in the payment of principal or interest on any of its funded obligations.
(5) Interest-bearing general obligations pledging the full faith and credit, including interest-bearing warrants, of any board of education of any county or municipality of the State of Alabama secured by pledge of the three-mill school tax.
(6) Promissory notes, bonds, or other evidences of indebtedness secured directly or collaterally by mortgage or trust deed which is a first lien on improved real estate in this or any other state of the United States of America; provided, that:

a. No interest or participation in any note, bond, or other evidence of indebtedness secured by mortgage shall hereafter be purchased for any fiduciary account unless the entire principal indebtedness secured by the mortgage shall at the time be controlled by the fiduciary, that:
b. No such interest or participation less than the entire indebtedness shall at any time be sold by the fiduciary to any person, estate, trust, or other entity, not controlled by the fiduciary, and that:
c. No fiduciary shall hereafter purchase from any trust or estate under its control or from itself for any trust or estate any such loan, bond, or other evidence of indebtedness secured by mortgage, or interest therein, unless the items so acquired shall in good faith and with due diligence have originally been made or acquired by the fiduciary for trust investment; and provided further, that this section shall not, insofar as the same is prohibited by the constitution of this state, authorize the investment of such funds in the stocks or bonds of private corporations.
(7) As a deposit in the savings department of any bank which is a member of the Federal Deposit Insurance Corporation. In the event the fiduciary is such a bank, such deposit may be made in its own savings department, and in such event, it shall only be liable for interest thereon at the same rates, and subject to the same regulations as other savings deposits therein; provided, that any such deposit in the savings account shall not exceed the amount authorized to be insured by the Federal Deposit Insurance Corporation.
(8) Bonds, the issuance of which has been authorized by the director of the Alabama Securities Commission and which are secured directly or collaterally by mortgages or trust deeds which are first liens on improved real estate in this or any other state of the United States of America; provided, that the value by appraisal of the realty must be not less than one and one-half times the amount of any mortgage secured by the realty; except:

a. Mortgages guaranteed or insured in whole or in part by the Federal Housing Administrator, or
b. Mortgages guaranteed or insured in whole or in part by the Administrator of Veterans’ Affairs of the United States. Nothing in this subdivision shall prohibit the bonds from being secured by more than one first lien. In the event that any, or all of the first liens securing the bond issue are satisfied, other securities authorized by law for the investment of trust funds may be substituted therefor.
(9) Obligations of the African Development Bank.
(b) The power herein given is in addition to and not in derogation of any power of investment given under existing law, but to the extent that any statute now in force is in conflict herewith, the same is hereby repealed. Effective January 1, 2007, the classes of investments that may be made by trustees shall be governed by Chapter 3B instead of this section.
  Previous section
Next section  
 Article 6 Contents