Authorized Investments; Standard of Care; Deviation From Will or Other Disposition; Investments by Personal Representative Who Is a Bank or Trust Company

  1. Law
  2. Georgia Code
  3. Wills, Trusts, and Administration of Estates
  4. Investments, Sales, and Conveyances
  5. Investments
  6. Authorized Investments; Standard of Care; Deviation From Will or Other Disposition; Investments by Personal Representative Who Is a Bank or Trust Company

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  1. Unless otherwise expressly provided in the will, a personal representative shall be authorized to make those investments that are listed in Code Sections 53-8-2 and 53-8-3.
  2. In making any other investments and in acquiring and retaining those investments and managing the property of the estate, the personal representative shall exercise the judgment and care, under the circumstances then prevailing, which persons 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.
  3. Within the limitations of the standard provided in subsection (b) of this Code section and considering individual investments as a part of an overall administrative strategy, a personal representative is authorized to acquire and retain every kind of property whether 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 persons of prudence, discretion, and intelligence acquire or retain for their own account; and within the limitations of such standard, a personal representative may retain property properly acquired, without limitation as to time and without regard to its suitability for original purchase.
  4. Nothing contained in this Code section shall be construed as restricting the power of a court of proper jurisdiction to permit a fiduciary to deviate from the terms of any will, agreement, or other disposition relating to the acquisition, investment, reinvestment, exchange, retention, sale, or management of fiduciary property.
  5. A personal representative that is a bank or trust company shall not be precluded from acquiring and retaining securities of or other interests in an investment company or investment trust because the bank or trust company or an affiliate provides services to the investment company or investment trust as investment adviser, custodian, transfer agent, registrar, sponsor, distributor, manager, or otherwise and receives compensation for such services.

(Code 1981, §53-8-1, enacted by Ga. L. 1996, p. 504, § 10; Ga. L. 1998, p. 1586, § 41.)

Law reviews.

- For article, "Fiduciary Problems of the Executor and Trustee: Conflicts of Interest, Violations of Fiduciary Duties, Surcharge, and Other Remedies of Beneficiaries," see 9 Ga. St. B.J. 187 (1972). For article, "The Scope of Permissible Investments by Fiduciaries Under Georgia Law," see 19 Ga. St. B.J. 6 (1982). For annual survey of law of wills, trusts, and administration of estates, see 38 Mercer L. Rev. 417 (1986). For note discussing the reintroduction in Georgia of the prudent investor rule, see 24 Mercer L. Rev. 513 (1973).

COMMENT

This section replaces former OCGA Secs. 53-8-1 through 53-8-3. (Former Sec. 53-8-4, which contained the effective date for these sections, is repealed as unnecessary.) The provisions of this Code section apply to all personal representatives, while the provision of the former Code section applied only to executors. Subsection (a) provides a "safe harbor" for personal representatives who invest in the authorized investments that are listed in the next two Code sections. For all other investments, personal representatives must adhere to the prudence standard described in the remaining provisions of this section. This prudence standard appeared as former OCGA Sec. 53-8-2(b) prior to the amendment of that statute in 1988. The standard for investing that appeared in former OCGA Sec. 53-8-2(b) and (c), as amended in 1988, has been retained for trustees and now appears Article 13 of Chapter 12 of this Title. Former OCGA Sec. 53-8-2(d), relating to income beneficiaries of trusts that qualify for the federal estate tax marital deduction, has also been moved to that section of the Georgia Trust Act. Subsection (b) of the new section appeared as subsection (a) of former OCGA Sec. 53-8-2. Subsection (c) of the new section carries forward former OCGA Sec. 53-8-3(b). Subsection (d) of the new section carries former OCGA Sec. 53-2-8(e).

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the statutory provisions, decisions under Ga. L. 1972, p. 450, § 1, and former O.C.G.A. § 53-8-2 are included in the annotations for this Code section.

Cited in Clayton v. First Nat'l Bank, 237 Ga. 604, 229 S.E.2d 346 (1976); Perling v. Citizens & S. Nat'l Bank, 250 Ga. 674, 300 S.E.2d 649 (1983).

RESEARCH REFERENCES

Am. Jur. 2d.

- 31 Am. Jur. 2d, Executors and Administrators, §§ 421, 499, 501, 502, 510, 543, 544.

C.J.S.

- 34 C.J.S., Executors and Administrators, §§ 274 et seq., 357.

ALR.

- Right of trustee to invest trust funds in stock of private corporation, 12 A.L.R. 574; 122 A.L.R. 657; 78 A.L.R.2d 7.

Right of trustee to retain unauthorized securities held by testator or creator of trust, 37 A.L.R. 559; 122 A.L.R. 801, 135 A.L.R. 1528; 47 A.L.R.2d 187.

Liability of trustee, guardian, executor, or administrator for loss of funds invested, as affected by order of court authorizing the investment, 88 A.L.R. 325.

Investment of trust funds in share or part of single security or group or pool of securities, 103 A.L.R. 1192; 110 A.L.R. 1166; 125 A.L.R. 669.

Trustee's, executor's, administrator's, or guardian's purchase from or sale to corporation of which he is an officer or stockholder, as voidable or as ground for surcharging his account, 105 A.L.R. 449.

Liability of trustee or other fiduciary for loss on investment as affected by the fact that it was taken in his own name without indication of fiduciary capacity, 106 A.L.R. 271; 150 A.L.R. 805.

Liability of trustee, guardian, executor, or administrator for loss of funds as affected by failure to obtain order of court authorizing investment, in absence of mandatory statute, 116 A.L.R. 437.

Surchargeability of trustee, executor, administrator, or guardian, in respect of mortgage investment, as affected by matters relating to value of property, 117 A.L.R. 871.

Effect of beneficiary's consent to, acquiescence in, or ratification of, improper investments or loans (including failure to invest) by trustee or other fiduciary, 128 A.L.R. 4.

Authorization or approval by court of investments which are "nonlegal" or contrary to the terms of the trust instrument, 170 A.L.R. 1219.

Rights, duties, and liability of corporation in connection with transfer of stock of decedent, 7 A.L.R.2d 1240.

Construction and effect of instrument authorizing or directing trustee or executor to retain investments received under such instrument, 47 A.L.R.2d 187.

Authorization by trust instrument of investment of trust funds in nonlegal investments, 78 A.L.R.2d 7.

Power and authority, in the absence of determining clause in will, of executor or administrator to lease out, or to rent, decedent's real estate, 95 A.L.R.2d 258.

Second and higher offer as affecting final approval of trustee's sale, 1 A.L.R.3d 629.

Duty of trustee to diversify investments, and liability for failure to do so, 24 A.L.R.3d 730.


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