CHAPTER 171

ORPHANS' COURT

INVESTMENT OF TRUSTEES, GUARDIANS AND OTHER FIDUCIARIES

AN ACT IN RELATION TO INVESTMENTS OF TRUSTEES, GUARDIANS AND OTHER FIDUCIARIES AND TO PROPERTY TAKEN OVER BY THEM, BEING AN AMENDMENT TO CHAPTER 117 OF THE REVISED CODE OF THE STATE OF DELAWARE AS AMENDED.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:

Section 1. That Section 35 of Chapter 117 of the Revised Code of Delaware (1935), being Section 4401 of said Code, as amended by Chapter 224, Volume 43, Laws of Delaware, be and the same is hereby further amended by striking out and repealing all of 4401. Section 35 of said Chapter 117, Revised Code of Delaware (1935) as contained. in Chapter 224, Volume 43, Laws of Delaware, and inserting in lieu thereof the following new section to be known and styled as 4401. Section 35:

4401. Section 35. Investments of Fiduciaries.

(a) The provisions of this Section 35 shall govern trustees, guardians and other fiduciaries, hereinafter in this Section called "fiduciaries", acting under wills, agreements, court orders and other instruments now existing or hereafter made.

(b) In acquiring, investing, reinvesting, exchanging, retaining, selling and managing property for the benefit of another, fiduciaries shall exercise the judgment and care under the circumstances then prevailing, which men of prudence, discretion and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital. Within the limitations of the foregoing standard, fiduciaries are authorized to acquire and retain every kind of property, real, personal or mixed, and every kind of investment, specifically including but not by way of limitation, bonds, debentures and other corporate obligations, and stocks, preferred or common, which men of prudence, discretion and intelligence acquire or retain for their own account, and within the limitations of the foregoing standard, fiduciaries may retain property properly acquired, without limitation as to time and without regard to its suitability for original purchase.

(c) Nothing contained in this Section 35 shall be construed as authorizing any departure from, or variation of, the express terms or limitations set forth in any will, agreement, court order or other instrument creating or defining the fiduciary's duties and powers, but the terms "legal investment" or "authorized investment" or words of similar import, as used in any such instrument, shall be taken to mean any investment which is permitted by the terms of subdivision (b) of this Section 35.

(d) Nothing contained in this Section 35 shall be construed as restricting the power of a court of proper jurisdiction to permit fiduciaries to deviate from the terms of any will, agreement, or other instrument relating to the acquisition, investment, reinvestment, exchange, retention, sale or management of fiduciary property.

(e) A bank or trust company authorized to act in a fiduciary capacity and acting in such a capacity, other than merely as agent, may invest funds held by it for investment as fiduciary in fractional undivided interests in a common fund composed exclusively of property permitted for investment by the terms of sub-division (b) of this Section 35 and of cash, provided that such common fund shall have been created and is managed exclusively by such bank or trust company as trustee under a written plan of which an original executed by such bank or trust company has been filed and is recorded in the office of the Register in Chancery of the County in which such bank or trust company is located; and also provided that under such a plan it shall not be permitted that any such fractional interests shall at any time be owned by any other than such bank or trust company as fiduciary under will, under agreement, or for an insane person, or as guardian of a minor, or as executor or administrator; and also provided that at least once each three months, as of a predetermined date, the fair value of the assets of the common fund shall be ascertained, and that fractional interest in such common fund may only be acquired or redeemed on such predetermined dates or within two business days thereafter by payment, in the case of acquisition, of an amount in cash therefor, or in the case of redemption, of an amount in cash or in kind, or partly in cash and partly in kind, equal to its proportionate part of the fair value of the common fund, and also provided that at the time of the making of an investment in such common fund there shall not be held in the fund any asset which, because of the nature of such asset, the bank or trust company might not then properly purchase as an investment for the fiduciary account for which the investment in the common fund is made ; and also provided that the bank or trust company shall not charge a fee or commission to the common fund for its management or receive any fees or commissions from any fiduciary estate which may be invested in a common fund other than those it would be entitled to receive if such estate were otherwise invested.

Approved March 10, 1943.