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Form a Business

Trust Powers

V.S.A. tit. 8, ch. 204, subch. 4
in effect

8 V.S.A. § 14401 Types of trust functions

14401. Types of trust functions (a) With the prior approval of its governing board, a financial institution may act alone or with others as: (1) fiduciary; (2) custodian of property; (3) agent or attorney in fact; (4) registrar or transfer agent of securities; (5) trustees under corporate mortgages, trust deeds or similar indentures; or (6) fiscal agent of the United States, a political subdivision thereof, a body politic, a corporation, or an individual. (b) With that approval, a financial institution may also be appointed and act as executor or coexecutor of a will, codicil, or writing testamentary, as administrator or co-administrator with the will annexed, as administrator or co-administrator of a person deceased, as receiver, assignee, trustee, alone or with others, or as guardian or co-guardian of a person subject to guardianship, and with that approval may relinquish the fiduciary office, under the same circumstances, in the same manner and subject to the same control by a court having jurisdiction, as a natural person legally qualified. Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.

8 V.S.A. § 14402 National financial institutions; state financial institutions

14402. National financial institutions; state financial institutions (a) To the same extent that the laws of the United States permit, a national financial institution located and doing business in this State may act, alone or with others, as specified in section 14401 this title. (b) Subject to the provisions of 11A V.S.A. chapter 15 and 11 V.S.A. chapter 21, subchapter 10, except that 11A V.S.A. § 15.06 and 11 V.S.A. § 3136 shall not apply to any financial institution, including a state trust company, a financial institution with trust powers with its principal place of business not in Vermont may act, alone or with others, as specified in section 14401 of this title, and may establish one or more places of business in this State for the conduct of such trust business, provided that: (1) it is a direct or indirect subsidiary of a bank holding company that has a direct or indirect financial institution subsidiary that has an office in this State at which deposits are accepted; or (2) the law of the state in which it is located or domiciled would allow either a Vermont financial institution or a national financial institution, with its principal place of business located in Vermont to establish one or more places of business in such state for the conduct of trust activities if authorized by its supervisory agency to exercise trust powers. (c) As a condition precedent to its right to act in the capacities specified in this section, it shall file a stipulation with the Commissioner of Taxes, in which it shall agree that any funds, securities, or property held by it under any appointment under this subchapter, shall be taxed in the same manner and to the same extent as funds of the same character held by a Vermont financial institution. (d) A state financial institution with trust powers, including a state trust company, shall obtain the Commissioner’s written approval before establishing a place of business in this State pursuant to subsection 11701(b) of this title. Before issuing such approval, the Commissioner must find that it is adequately staffed, equipped, and able to furnish trust services in this State. The Commissioner may examine its activities in this State at any time deemed necessary to ensure its continued safety and soundness, ability to furnish trust services, and compliance with the laws of this State. It shall make its books and records pertaining to its business in this State available to the Commissioner for such examination. Each state financial institution shall pay fees and assessments as prescribed by sections 18, 19, and 11501 of this title. Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.

8 V.S.A. § 14403 Approval of Commissioner

14403. Approval of Commissioner No financial institution not otherwise expressly authorized by its respective supervisory agency under state or federal law may exercise the powers provided in this subchapter until it has applied for and obtained approval of the Commissioner to do so under subsection 11701(b) of this title. The Commissioner shall conduct inquiry into the affairs of the financial institution applying for those powers to determine if the financial institution is staffed, equipped, and able to furnish those services. Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2005, No. 36, § 5, eff. June 1, 2005.

8 V.S.A. § 14404 Security

14404. Security The capital of a financial institution exercising trust powers shall be held as security for the faithful discharge of the duties undertaken thereby as well as for the claims of other creditors. The financial institution shall furnish to the authority making the appointment a good and sufficient bond for a sum not less than 25 percent of the amount of the trust fund, conditioned for the faithful discharge of the duties undertaken by virtue of section 14401 of this title. However, when the bond would not exceed $2,000.00, a financial institution shall be relieved of furnishing it. Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.

8 V.S.A. § 14405 Powers and duties of officers

14405. Powers and duties of officers In proceedings in the Probate Division of the Superior Court or elsewhere, connected with authority exercised as executor, administrator, receiver, assignee, trustee, or guardian, all accounts, returns, and other papers may be signed and sworn to in behalf of such a financial institution exercising trust powers by any officer thereof duly authorized by it. The answers and examinations of that officer, under oath, shall be received as the answers and examinations of the financial institution. The court may order and compel any and all officers of the financial institution to answer and attend the examinations, in the same manner as if they, personally, were parties to the proceeding or inquiry. Such a financial institution shall not be required to receive or hold any property or money or to execute any trust contrary to its own desire. Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2009, No. 154 (Adj. Sess.), § 238a, eff. Feb. 1, 2011.

8 V.S.A. § 14406 Segregation of trust funds; exception

14406. Segregation of trust funds; exception All monies, property, or securities received or held by a financial institution in the capacity of executor, administrator, receiver, assignee, trustee, or guardian shall be kept separate and distinct from its general business and shall not be mingled with the investments of its assets or be liable for its debts or obligations. However, a financial institution exercising trust powers, in good faith, may deposit temporarily in its commercial or savings departments any money so held in trust awaiting distribution or investment and may also deposit in its savings department as an investment for any one trust an amount insurable and insured by the Federal Deposit Insurance Corporation. All such deposits in either department shall be in the name of the trust or in the name of the financial institution as trustee of the trust. If the security afforded by virtue of this section and section 14404 of this title is insufficient to satisfy in full any claim growing out of the holding or management of monies, property, and securities so received and held, the unsatisfied balance shall then be satisfied as are demands of the general creditors of the financial institution. Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.

8 V.S.A. § 14407 Collective investment funds

14407. Collective investment funds (a) A Vermont financial institution may invest assets that it holds as a fiduciary in the following collective investment funds: (1) a fund maintained by the financial institution, or by one or more affiliated financial institutions, exclusively for the collective investment and reinvestment of money contributed to the fund by the financial institution, or by one or more affiliated financial institutions, in its capacity as trustee, executor, administrator, guardian, or custodian under the Uniform Transfers to Minors Act; (2) a fund consisting solely of assets of retirement, pension, profit sharing, stock bonus, or other trusts that are exempt from federal income taxation under the Internal Revenue Code; and (3) a fund consisting of any other assets held as a fiduciary, to the extent not prohibited by applicable law. (b) In addition to any other rules that the Commissioner finds necessary or desirable for the administration of this section, the Commissioner may adopt rules on the following: (1) the requirements for a written plan for the establishment, maintenance, and operation of collective investment funds; (2) the method and frequency of valuation of such fund’s assets; (3) the admission and withdrawal of accounts; (4) standards on self-dealing and conflicts of interest; (5) permissible management fees; (6) the requirements for audits and financial reports of collective investment funds; and (7) the requirements for the establishment, maintenance, and operation of other investments permitted by subdivision (a)(3) of this section, including the treatment of exemptions from the provisions of this section. (c) A Vermont financial institution administering a collective investment fund shall have exclusive management thereof, except as a prudent person might delegate responsibilities to others. (d) Each participating account in a collective investment fund shall have a proportionate interest in all the fund’s assets. (e) A Vermont financial institution administering a collective investment fund may charge reasonable expenses incurred in operating the fund, but not expenses associated with establishing or reorganizing a collective investment fund. (f) A Vermont financial institution may not advertise any collective investment fund except in connection with the advertisement of the general fiduciary services of the institution. (g) A Vermont financial institution shall not issue any certificate representing an interest in a collective investment fund, except to provide a withdrawing account with an interest in a segregated investment. Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2015, No. 23, § 87.

8 V.S.A. § 14408 Registration and sale of securities

14408. Registration and sale of securities A Vermont or state financial institution owning or holding stocks or other securities in any fiduciary capacity may cause the same to be registered in the name of a nominee. The word “nominee” shall be construed to include one or more natural persons, a partnership, a corporation, or similar entity. Any such securities jointly held in a fiduciary capacity by a financial institution and another, individual or corporate, may be registered in the name of a nominee mutually satisfactory to the co-fiduciaries. Any fiduciary acting jointly with a financial institution may authorize and direct the financial institution in writing to register securities provided in this section. An individual or corporate fiduciary may deliver any such securities to a financial institution as custodian and may authorize and direct the financial institution in writing to register such securities in the name of a nominee. A financial institution having caused securities to be registered in the name of a nominee as provided in this section and wishing or being required by the terms of its fiduciary agreement to deliver them to one legally entitled thereto shall first cause them to be transferred into the name of the one to receive delivery. Sales of any such securities made by a financial institution under its fiduciary authority may be completed by delivery of the security, endorsed by the nominee without the necessity of transfer through a joint fiduciary, the trust-creator, or the beneficiary. Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 299, eff. July 1, 2022.

8 V.S.A. § 14409 Disposition of securities upon court order; liability for acts of nominee

14409. Disposition of securities upon court order; liability for acts of nominee Any fiduciary financial institution may dispose of any security under an order or decree of any court of competent jurisdiction by delivery of the security endorsed by the nominee as provided in section 14408 of this title in the case of sales. Any fiduciary financial institution shall be absolutely liable for any loss occasioned by the acts of the nominee or the financial institution with respect to any securities registered in the nominee’s name. Both legal and equitable ownership of all securities in the financial nominee’s possession or subject to the financial nominee’s control shall be fully revealed by the financial institution’s records. Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.

8 V.S.A. § 14410 Fiduciary investments

14410. Fiduciary investments (a) In the absence of an express prohibition in the instrument, judgment, decree, power, order, or other writing creating a trust or other fiduciary relationship, a financial institution acting as fiduciary may invest and reinvest funds held by it in a fiduciary capacity in the securities of an open-end or closed-end investment company or investment trust registered under 15 U.S.C. § 80a-1 to 80a-64 (Investment Company Act of 1940), as that act exists now or as amended in the future. (b) The investments authorized in subsection (a) of this section may be made even if the financial institution, or an affiliate thereof, is providing services to the investment company and is receiving reasonable compensation for such services as an advisor, manager, sponsor, administrator, broker, distributor, custodian, shareholder servicing agent, transfer agent, registrar, or any related services. At least annually, the financial institution shall disclose in a clear and conspicuous manner to the principal of each fiduciary account the fees it has charged or received from the investment company, or an affiliate thereof, for such services and the basis upon which compensation is calculated, expressed either in a specific amount or as a percentage of asset value. Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.
Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/08/204Fetched: 10/21/2026

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