N.J. Stat. tit. 3B, ch. 20

N.J. Stat. tit. 3B, ch. 20
in effect

N.J. Stat. § 3B:20-1 Definitions

3B:20-1. Definitions. As used in this chapter: a. "Trust instrument" means and includes a will, deed, agreement, court order or other instrument pursuant to which money or other property is entrusted to a fiduciary; b. "Fiduciary" means an individual or corporation that is authorized to act as or acts as a trustee, personal representative, conservator, guardian, and every other individual or corporation charged with the duty of administering a trust estate; c. "Trust estate" or "trust assets" means money or other property entrusted to a fiduciary; d. (Deleted by amendment, P.L.1997, c.26.) e. "Beneficiary" means an individual or corporation for whose benefit a fiduciary acts or is authorized to act. Amended 1983, c.192, s.2; 1995, c.48, s.1; 1997, c.26, s.13.

N.J. Stat. § 3B:20-3 Corporate fiduciary may register securities in name of nominee without disclosing fiduciary capacity

Any bank may, when acting as sole fiduciary or when acting as cofiduciary, with the consent of a cofiduciary or cofiduciaries, cause any certificates for shares of stock, bonds, debentures, notes or other securities, herein denominated "securities" , held in fiduciary capacities, to be registered and held in the name of a nominee of the corporate fiduciary without disclosing the fiduciary capacity in which the securities are held; provided, that a. The records of the fiduciary or fiduciaries and all accounts rendered by it or them shall at all times clearly show the ownership of the securities so registered, b. The securities shall at all times be kept separate and apart from the assets of the fiduciary or fiduciaries, and c. The nominee shall not have possession of or access to the securities. L.1981, c. 405, s. 3B:20-3, eff. May 1, 1982.

N.J. Stat. § 3B:20-4 Corporate fiduciary liable for loss caused by acts of nominee

The fiduciary or fiduciaries shall be liable for any loss caused by the acts of the nominee with respect to securities registered as provided in N.J.S. 3B:20-3. L.1981, c. 405, s. 3B:20-4, eff. May 1, 1982.

N.J. Stat. § 3B:20-5 Limitation on authority to register securities in name of nominee

A fiduciary or fiduciaries may not register securities in the name of a nominee where any will, trust instrument or any order appointing or relating to any fiduciary or fiduciaries prohibits securities from being registered in the name of a nominee. L.1981, c. 405, s. 3B:20-5, eff. May 1, 1982.

N.J. Stat. § 3B:20-7 Directions of court concerning the sale, conversion or retention of investments

3B:20-7. Directions of court concerning the sale, conversion or retention of investments. When securities or other property come into possession of a fiduciary as part of the assets of the trust estate the fiduciary is to administer or manage, the fiduciary may apply to the court for direction as to the sale, conversion or retention of the securities or property. The court shall make an order as it shall deem most advantageous to the trust estate and the interests of persons entitled to share therein. Amended 1997, c.26, s.14.

N.J. Stat. § 3B:20-8 Protection afforded fiduciary continuing investments under court order

3B:20-8. Protection afforded fiduciary continuing investments under court order. A fiduciary shall not be held accountable for any loss by reason of continuing to hold the trust assets in accordance with an order pursuant to N.J.S.3B:20-7. Amended 1997, c.26, s.15.

N.J. Stat. § 3B:20-9 Application to court upon change in conditions

3B:20-9. Application to court upon change in conditions. If, as a result of a change in conditions which occurs or which may be reasonably foreseen, the objects of the trust estate may be defeated in whole or in part by the investment or retention of investments of the trust estate in property to which the fiduciary is limited by the trust instrument, the fiduciary or any beneficiary of the trust may apply to the court to secure authority permitting or directing the fiduciary to invest all or any part of the trust estate in accordance with the provisions of N.J.S.3B:20-1 et seq. Amended 1997, c.26, s.16.

N.J. Stat. § 3B:20-10 Investments by court order upon change in conditions

3B:20-10. Investments by court order upon change in conditions. If the court finds that by reason of a change in conditions which has occurred since the creation of the trust or which may be reasonably foreseen, the objects of the trust estate may be defeated in whole or in part by the investment or retention of the trust estate in property to which the fiduciary is limited by the trust instrument and that the objects of the trust estate and those interested in it would be promoted by the investment of all or part of the trust estate otherwise, the court shall authorize or direct the fiduciary to invest the whole of the trust estate or that part of it as shall be designated, in accordance with the provisions of N.J.S.3B:20-1 et seq. Amended 1997, c.26, s.17.

N.J. Stat. § 3B:20-11.1 Short title

1. Sections 1 through 12 of this 1997 amendatory and supplementary act shall be known and may be cited as the "Prudent Investor Act." L.1997,c.26,s.1.

N.J. Stat. § 3B:20-11.2 Compliance by fiduciary with prudent investor rule

2. a. Except as provided in subsection b. of this section, a fiduciary who invests and manages trust assets owes a duty to the beneficiaries of the trust to comply with the prudent investor rule, as set forth in this act. b. The prudent investor rule is a default rule that may be expanded, restricted, eliminated, or otherwise altered by express provisions of the trust instrument. A fiduciary is not liable to a beneficiary to the extent that the fiduciary acted in reasonable reliance on those express provisions. Nothing herein shall affect the jurisdiction of the Superior Court to order or authorize a fiduciary to deviate from the express terms or provisions of a trust instrument for the causes, in the manner, and to the extent otherwise provided by law. L.1997,c.26,s.2.

N.J. Stat. § 3B:20-11.3 Investments, management of trust assets by fiduciary

3. a. A fiduciary shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the fiduciary shall exercise reasonable care, skill, and caution. b. A fiduciary's investment and management decisions respecting individual assets shall not be evaluated in isolation, but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust. c. Subject to the standards established in this act, a fiduciary may invest in any kind of property or type of investment. No specific investment or course of action is inherently imprudent. d. Among the circumstances that the fiduciary shall consider in investing and managing trust assets are those of the following as are relevant to the trust and its beneficiaries: (1) general economic conditions; (2) the possible effect of inflation or deflation; (3) the expected tax consequences of investment decisions or strategies; (4) the role that each investment or course of action plays within the overall trust portfolio; (5) the expected total return from income and the appreciation of capital; (6) other resources of the beneficiaries; (7) the need for liquidity, for regularity of income, and for preservation or appreciation of capital; and (8) an asset's special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries as, for example, an interest in a closely-held enterprise, tangible and intangible personalty, or real estate. e. The fiduciary shall take reasonable steps to verify facts relevant to the investment and management of trust assets and may rely and be fully protected in relying upon statistical, financial, corporate or other information as to a particular investment, and upon ratings or other opinion as to the financial or other status thereof, contained in or offered by any financial, statistical, investment, rating or other publication or service published for the use of and accepted as reliable by investors in like investments or upon a copy of the prospectus prepared and filed with the Securities and Exchange Commission in connection with a new issue. f. A fiduciary who has special skills or expertise, or is named fiduciary in reliance upon representations of special skills or expertise, has a duty to use those special skills or expertise. L.1997,c.26,s.3.

N.J. Stat. § 3B:20-11.4 Diversification of investments

4. A fiduciary shall diversify the investments of the trust unless the fiduciary reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying. L.1997,c.26,s.4.

N.J. Stat. § 3B:20-11.5 Assets to be managed in interest of beneficiaries

5. A fiduciary shall invest and manage the trust assets solely in the interest of the beneficiaries. L.1997,c.26,s.5.

N.J. Stat. § 3B:20-11.6 Impartiality of fiduciary

6. If a trust has two or more beneficiaries, the fiduciary shall act impartially in investing and managing the trust assets, taking into account any differing interests of the beneficiaries. L.1997,c.26,s.6.

N.J. Stat. § 3B:20-11.7 Review of trust assets

7. Within six months after accepting trust assets, the fiduciary shall review the trust assets and shall make and implement decisions concerning the retention and disposition of assets received at the inception of the trust, in order to bring the trust portfolio into compliance with the provisions of the trust instrument or with the requirements of this act. L.1997,c.26,s.7.

N.J. Stat. § 3B:20-11.8 Incurrence of costs by fiduciary

8. In investing and managing trust assets, a fiduciary may only incur costs that are appropriate and reasonable in relation to the assets, the purposes of the trust, and the skills of the fiduciary. A fiduciary who delegates investment and management functions pursuant to section 10 of P.L.1997, c.26 (C.3B:20-11.10) shall control the overall costs of the delegation, including making a reduction in the amount of corpus commissions otherwise allowable to the fiduciary with respect to the trust assets for which investment responsibility has been delegated, which reduction shall take account of the duties and responsibilities retained by the fiduciary with respect to such assets. L.1997,c.26,s.8.

N.J. Stat. § 3B:20-11.9 Rule expresses standard of conduct

9. The prudent investor rule expresses a standard of conduct, not outcome. Compliance with the rule is determined in light of the facts and circumstances existing at the time of the fiduciary's decision or action. L.1997,c.26,s.9.

N.J. Stat. § 3B:20-11.10 Delegation of investment, management functions by fiduciary

10. a. A fiduciary may delegate investment and management functions that a prudent fiduciary of comparable skills could properly delegate under the circumstances. The fiduciary shall exercise reasonable care, skill, and caution in: (1) selecting an agent with special investment skills and expertise and of sound financial standing; (2) establishing the scope and terms of the delegation consistent with the purpose and terms of the trust instrument; and (3) periodically reviewing the agent's actions in order to monitor the agent's performance and compliance with the scope and terms of the delegation. b. In performing a delegated function, the agent shall owe to the trustee and the beneficiaries the same duties as the fiduciary and shall be held to the same standards as the fiduciary. c. The fiduciary who complies with the requirements of subsection a. of this section shall not be liable to the beneficiaries or to the trust for the decisions or actions of the agent to whom the function was delegated. d. By accepting the delegation of a trust function from the fiduciary of a trust that is subject to the law of New Jersey, the agent submits to the jurisdiction of the courts of New Jersey, even if the delegation agreement provides otherwise. e. If there are two or more fiduciaries serving, only one of whom has special investment and management skills or expertise or has been named in reliance upon representations of such special skills or expertise, then the fiduciary or fiduciaries not possessed of such special skills or expertise may, pursuant to this section, delegate investment and management functions to the other fiduciary as if such other fiduciary were an agent selected in accordance with this section and subject to the provisions of this section. f. A fiduciary shall provide reasonable advance written notice on each occasion upon which the fiduciary intends to delegate investment and management functions pursuant to this section, including the identity of the agent, to the beneficiary or beneficiaries eligible to receive income from the trust on the date of the intended delegation. Upon providing such notice, the fiduciary shall be authorized to delegate investment and management functions pursuant to this section. L.1997,c.26,s.10.

N.J. Stat. § 3B:20-11.11 Construction of terms

11. The following terms or comparable language in a trust instrument, unless otherwise limited or modified by that instrument, shall be construed as authorizing any investment or strategy permitted under this act: "investments permissible by law for investment of trust funds," "legal investment," "authorized investments," "using the judgment and care under the circumstances then prevailing that 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," "prudent man rule," "prudent trustee rule," "prudent person rule," and "prudent investor rule." L.1997,c.26,s.11.

N.J. Stat. § 3B:20-11.12 Applicability of act

12. This act shall apply to and govern trusts existing on and created after its effective date. As applied to trusts existing on its effective date, this act governs only actions or omissions occurring after that date. L.1997,c.26,s.12.

N.J. Stat. § 3B:20-18 Authority to exchange or convert securities

3B:20-18. Authority to exchange or convert securities. Except as otherwise provided in the trust instrument, a fiduciary who holds securities in a trust estate issued by a corporation which has been recapitalized or reorganized, or which has been a party to a merger or consolidation, may exchange or convert the securities so held for or into other securities issued by the corporation as an incident of its recapitalization, reorganization, merger or consolidation, or issued by the corporation's successor corporation as an incident of the merger or consolidation. Amended 1997, c.26, s.18.

N.J. Stat. § 3B:20-19 Fiduciary as issuing corporation

3B:20-19. Fiduciary as issuing corporation. An exchange or conversion of securities may be made pursuant to this article notwithstanding that the fiduciary which holds the securities in a trust estate is the same corporation which issued the securities. Amended 1997, c.26, s.19.

N.J. Stat. § 3B:20-21 Definitions

As used in this article: a. "Banking institution" includes State chartered banks and national banking associations; b. "Bank holding company" means a bank holding company as defined in the Bank Holding Company Act of 1956 (Act of May 9, 1956, 70 Stat. 1933, 12 U.S.C. 1841 et seq.) as amended by the Bank Holding Company Act Amendments of 1970 (Act of December 31, 1970, 84 Stat. 1760). L.1981, c. 405, s. 3B:20-21, eff. May 1, 1982.

N.J. Stat. § 3B:20-22 Authority to exchange or convert

When a bank holding company which is a corporation acquires 80% or more of the outstanding capital stock of a banking institution, any shares of the capital stock of the banking institution held in a trust estate by a fiduciary may be exchanged for or converted into the capital stock of the bank holding company as an incident of the company's acquisition of the shares. L.1981, c. 405, s. 3B:20-22, eff. May 1, 1982.

N.J. Stat. § 3B:20-23 Banking institution acting as fiduciary

3B:20-23. Banking institution acting as fiduciary. An exchange or conversion of shares may be made pursuant to this article notwithstanding that the fiduciary which holds the shares in the trust estate is the banking institution which issued them. Amended 1997, c.26, s.20.

N.J. Stat. § 3B:20-25 Application of article

3B:20-25. Application of article. This article shall not apply where a trust instrument contains provisions inconsistent with or contrary to the provisions of this article. Amended 1997, c.26, s.21.

N.J. Stat. § 3B:20-26 Short title

This article shall be known and may be cited as the "Clearing Corporation Deposit Law of 1973." L.1981, c. 405, s. 3B:20-26, eff. May 1, 1982.

N.J. Stat. § 3B:20-27 Definitions

3B:20-27. Definitions. As used in this article: a. (Deleted by amendment, P.L.1997, c.26). b. "Securities" means instruments which are commonly dealt with on securities exchanges or markets or commonly recognized in any area in which they are issued or dealt with as a medium for investment, and which are subject to the provisions of chapter 8, "Uniform Commercial Code-Investment Securities" (chapter 8, Title 12A of the New Jersey Statutes); c. "Clearing corporation" means a corporation as defined in N.J.S.12A:8-102. Amended 1997, c.26, s.22.

N.J. Stat. § 3B:20-28 Deposit of securities by fiduciary

Notwithstanding any other provision of law, a fiduciary holding securities in a trust estate, or any banking institution holding securities as a custodian or managing agent, or as custodian for a fiduciary, is authorized to deposit or arrange for the deposit of the securities in a clearing corporation. L.1981, c. 405, s. 3B:20-28, eff. May 1, 1982.

N.J. Stat. § 3B:20-29 Merger of certificates deposited

When securities are deposited, certificates representing securities of the same class of the same issuer may be merged and held in bulk in the name of the nominee of the clearing corporation with any other securities deposited in the clearing corporation by any person regardless of the ownership of the securities, and certificates of small denomination may be merged into one or more certificates of larger denomination. L.1981, c. 405, s. 3B:20-29, eff. May 1, 1982.

N.J. Stat. § 3B:20-30 Records of securities deposited

The records of the fiduciary and the records of a banking institution acting as custodian, as managing agent or as custodian for a fiduciary, shall at all times show the name of the party for whose account the securities are deposited. L.1981, c. 405, s. 3B:20-30, eff. May 1, 1982.

N.J. Stat. § 3B:20-31 Transfer of ownership in securities deposited

Ownership of, and other interests in, securities deposited may be transferred by bookkeeping entry on the books of the clearing corporation without physical delivery of certificates representing the securities. L.1981, c. 405, s. 3B:20-31, eff. May 1, 1982.

N.J. Stat. § 3B:20-32 Rules and regulations governing banking institutions

A banking institution depositing securities pursuant to this article shall be subject to rules and regulations as, in the case of State chartered institutions the Commissioner of the Department of Banking and, in the case of national banks, the Comptroller of the Currency may from time to time issue. L.1981, c. 405, s. 3B:20-32, eff. May 1, 1982.

N.J. Stat. § 3B:20-33 Certification of securities deposited

A banking institution acting as custodian for a fiduciary shall, on demand by the fiduciary, certify in writing to the fiduciary securities deposited by the banking institution in a clearing corporation for the account of the fiduciary. A fiduciary shall, on demand by any party to a judicial proceeding for the settlement of the fiduciary's account or on demand by the attorney for the party, certify in writing to the party the securities deposited by the fiduciary in the clearing corporation for its account as the fiduciary. L.1981, c. 405, s. 3B:20-33, eff. May 1, 1982.

N.J. Stat. § 3B:20-34 Application of article

3B:20-34. Application of article. This article shall apply to any fiduciary holding securities in its fiduciary capacity, and to any banking institution holding securities as a custodian, managing agent or custodian for a fiduciary, acting on January 2, 1974, or who thereafter may act regardless of the date of the trust instrument by which the fiduciary is appointed and regardless of whether or not the fiduciary or the banking institution acting as custodian, managing agent or custodian for a fiduciary owns capital stock of the clearing corporation. Amended 1997, c.26, s.23.

N.J. Stat. § 3B:20-35 Construction of article

Nothing contained in this article shall be construed as relieving a fiduciary depositing securities as authorized herein from the duty to account for all securities so deposited. L.1981, c. 405, s. 3B:20-35, eff. May 1, 1982.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.njleg.state.nj.us/legislative-activity/statutesFetched: 10/17/2026

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