Kentucky Statutes 386.020 – Authorized investments of trust funds — Fiduciary to account for profits — Section not applicable to trustees
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(1) Any fiduciary holding funds for loan or investment may invest them in:
(a) Bonds or other interest-bearing obligations of the federal government;
(b) Bonds, state warrants, and other interest-bearing obligations of this state;
(c) Obligations issued separately or collectively by or for federal land banks, federal intermediate credit banks, and banks for cooperatives under the Act of Congress known as the Farm Credit Act of 1971, 85 Stat. 583, 12 U.S.C. sec.
2001 and amendments thereto;
(d) Notes and bonds secured by mortgage or trust deed insured by the federal housing administrator, obligations issued or insured by the federal housing administrator, and securities issued by national mortgage associations;
(e) Obligations representing loans and advances of credit that are eligible for credit insurance by the federal housing administrator, and the fiduciary may obtain such insurance;
(f) Loans secured by real property or leasehold, that the federal housing administrator insures or makes a commitment to insure, and the fiduciary may obtain such insurance;
(g) Real estate mortgage notes, bonds, and other interest-bearing or dividend- paying securities, including securities of any open-end or closed-end management type investment company or investment trust registered under the Federal Investment Company Act of 1940 or units of common trust funds managed by the fiduciary, which would be regarded by prudent businessmen as a safe investment. The fact that the fiduciary is providing services to the foregoing investment company or trust as investment advisor, custodian, transfer agent, registrar, or otherwise shall not preclude the fiduciary from investing in the securities of such investment or trust;
(h) Real estate, after obtaining the approval of the District Court for such investment;
(i) Life insurance, endowment, and annuity contracts issued by legal reserve companies authorized to do business in this state, after obtaining the approval of the District Court for such investment. Said fiduciary may select any optional settlement provided in a policy maturing by death or as an endowment;
(j) Notes, other interest-bearing obligations, and purchases of participations in such instruments, that are guaranteed in whole or in part by the United States of America or by any agency or instrumentality thereof;
(k) Certificates of deposit and savings accounts of any state or national bank whose deposits are insured by the Federal Deposit Insurance Corporation and whose main office is in this state, including itself, if such fiduciary is a bank. Any portion of such investments that is not insured by the Federal Deposit Insurance Corporation shall be fully secured by:
1. An irrevocable letter of credit issued by the United States of America or by an agency or instrumentality thereof;
2. A pledge of securities named in this subsection as collateral;
3. A surety bond; or
4. A combination of such irrevocable letters of credit, securities, and surety bonds; and
(l) United States government securities or United States government agency securities, the payment of the principal and interest on which the full faith and credit of the United States is pledged, said investments being made under the terms of a repurchase agreement between the fiduciary and any state or national bank whose main office is in this state, including itself, if such fiduciary is a bank.
(2) Fiduciaries holding funds for loan or investment may make loans with the securities named in subsection (1) of this section as collateral.
(3) The fiduciary shall account for all interest or profit received. (4) This section shall not apply to trustees.
Effective: July 15, 2014
History: Amended 2014 Ky. Acts ch. 25, sec. 101, effective July 15, 2014. — Amended
2002 Ky. Acts ch. 157, sec. 1, effective July 15, 2002. — Amended 1990 Ky. Acts ch.
450, sec. 1, effective July 13, 1990. — Amended 1986 Ky. Acts ch. 391, sec. 1, effective July 15, 1986. — Amended 1980 Ky. Acts ch. 134, sec. 1, effective July 15,
1980. — Amended 1976 (1st Extra. Sess.) Ky. Acts ch. 14, sec. 325, effective January
1, 1978. — Amended 1976 Ky. Acts ch. 107, sec. 3. — Amended 1970 Ky. Acts ch.
267, sec. 1. — Amended 1962 Ky. Acts ch. 133, sec. 1.– Amended 1960 Ky. Acts ch.
155, sec. 1. — Amended 1954 Ky. Acts ch. 52, sec. 1. — Amended 1950 Ky. Acts ch.
171, sec. 1. — Amended 1944 Ky. Acts ch. 111, sec. 1. — Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky. Stat. secs. 4706, 4706a, 4706-6,
4706-7.
(a) Bonds or other interest-bearing obligations of the federal government;
Terms Used In Kentucky Statutes 386.020
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Company: may extend and be applied to any corporation, company, person, partnership, joint stock company, or association. See Kentucky Statutes 446.010
- Deed: The legal instrument used to transfer title in real property from one person to another.
- Federal: refers to the United States. See Kentucky Statutes 446.010
- 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.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- National Bank: A bank that is subject to the supervision of the Comptroller of the Currency. The Office of the Comptroller of the Currency is a bureau of the U.S. Treasury Department. A national bank can be recognized because it must have "national" or "national association" in its name. Source: OCC
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
- State: when applied to a part of the United States, includes territories, outlying possessions, and the District of Columbia. See Kentucky Statutes 446.010
(b) Bonds, state warrants, and other interest-bearing obligations of this state;
(c) Obligations issued separately or collectively by or for federal land banks, federal intermediate credit banks, and banks for cooperatives under the Act of Congress known as the Farm Credit Act of 1971, 85 Stat. 583, 12 U.S.C. sec.
2001 and amendments thereto;
(d) Notes and bonds secured by mortgage or trust deed insured by the federal housing administrator, obligations issued or insured by the federal housing administrator, and securities issued by national mortgage associations;
(e) Obligations representing loans and advances of credit that are eligible for credit insurance by the federal housing administrator, and the fiduciary may obtain such insurance;
(f) Loans secured by real property or leasehold, that the federal housing administrator insures or makes a commitment to insure, and the fiduciary may obtain such insurance;
(g) Real estate mortgage notes, bonds, and other interest-bearing or dividend- paying securities, including securities of any open-end or closed-end management type investment company or investment trust registered under the Federal Investment Company Act of 1940 or units of common trust funds managed by the fiduciary, which would be regarded by prudent businessmen as a safe investment. The fact that the fiduciary is providing services to the foregoing investment company or trust as investment advisor, custodian, transfer agent, registrar, or otherwise shall not preclude the fiduciary from investing in the securities of such investment or trust;
(h) Real estate, after obtaining the approval of the District Court for such investment;
(i) Life insurance, endowment, and annuity contracts issued by legal reserve companies authorized to do business in this state, after obtaining the approval of the District Court for such investment. Said fiduciary may select any optional settlement provided in a policy maturing by death or as an endowment;
(j) Notes, other interest-bearing obligations, and purchases of participations in such instruments, that are guaranteed in whole or in part by the United States of America or by any agency or instrumentality thereof;
(k) Certificates of deposit and savings accounts of any state or national bank whose deposits are insured by the Federal Deposit Insurance Corporation and whose main office is in this state, including itself, if such fiduciary is a bank. Any portion of such investments that is not insured by the Federal Deposit Insurance Corporation shall be fully secured by:
1. An irrevocable letter of credit issued by the United States of America or by an agency or instrumentality thereof;
2. A pledge of securities named in this subsection as collateral;
3. A surety bond; or
4. A combination of such irrevocable letters of credit, securities, and surety bonds; and
(l) United States government securities or United States government agency securities, the payment of the principal and interest on which the full faith and credit of the United States is pledged, said investments being made under the terms of a repurchase agreement between the fiduciary and any state or national bank whose main office is in this state, including itself, if such fiduciary is a bank.
(2) Fiduciaries holding funds for loan or investment may make loans with the securities named in subsection (1) of this section as collateral.
(3) The fiduciary shall account for all interest or profit received. (4) This section shall not apply to trustees.
Effective: July 15, 2014
History: Amended 2014 Ky. Acts ch. 25, sec. 101, effective July 15, 2014. — Amended
2002 Ky. Acts ch. 157, sec. 1, effective July 15, 2002. — Amended 1990 Ky. Acts ch.
450, sec. 1, effective July 13, 1990. — Amended 1986 Ky. Acts ch. 391, sec. 1, effective July 15, 1986. — Amended 1980 Ky. Acts ch. 134, sec. 1, effective July 15,
1980. — Amended 1976 (1st Extra. Sess.) Ky. Acts ch. 14, sec. 325, effective January
1, 1978. — Amended 1976 Ky. Acts ch. 107, sec. 3. — Amended 1970 Ky. Acts ch.
267, sec. 1. — Amended 1962 Ky. Acts ch. 133, sec. 1.– Amended 1960 Ky. Acts ch.
155, sec. 1. — Amended 1954 Ky. Acts ch. 52, sec. 1. — Amended 1950 Ky. Acts ch.
171, sec. 1. — Amended 1944 Ky. Acts ch. 111, sec. 1. — Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky. Stat. secs. 4706, 4706a, 4706-6,
4706-7.