AN ACT Relating to
investment of trust funds; amending RCW 11.100.010, 11.100.020, 11.100.035, and
11.100.130; adding new sections to chapter 11.100 RCW; creating a new section;
providing an effective date; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
WASHINGTON:
Sec. 1. RCW 11.100.010 and 1985
c 30 s 63 are each amended to read as follows:
Any corporation,
association, or person handling or investing trust funds as a fiduciary shall
be governed in the handling and investment of such funds as in this chapter
specified. A fiduciary who invests and manages trust assets owes a duty to
the beneficiaries of the trust to comply with requirements of this chapter.
The specific requirements of this chapter may be expanded, restricted,
eliminated, or otherwise altered by provisions of the controlling instrument.
Sec. 2. RCW 11.100.020 and 1985
c 30 s 65 are each amended to read as follows:
(1) A fiduciary is
authorized to acquire and retain every kind of property. In acquiring,
investing, reinvesting, exchanging, selling and managing property for the
benefit of another, a fiduciary, in determining the prudence of a particular
investment, shall give due consideration to the role that the proposed
investment or investment course of action plays within the overall portfolio of
assets. In applying such total asset management approach, a fiduciary 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, and if the fiduciary has special skills or is named
trustee on the basis of representations of special skills or expertise, the
fiduciary is under a duty to use those skills.
(2) Except as may be
provided to the contrary in the instrument, the following are among the factors
that should be considered by a fiduciary in applying this total asset
management approach:
(a) The probable income
as well as the probable safety of their capital;
(b) Marketability of
investments;
(c) General economic
conditions;
(d) Length of
the term of the investments;
(((d))) (e)
Duration of the trust;
(((e))) (f)
Liquidity needs;
(((f))) (g)
Requirements of the beneficiary or beneficiaries;
(((g))) (h)
Other assets of the beneficiary or beneficiaries, including earning capacity;
and
(((h))) (i)
Effect of investments in increasing or diminishing liability for taxes.
(3) Within the
limitations of the foregoing standard, and subject to any express provisions or
limitations contained in any particular trust instrument, a fiduciary is
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, debentures and other corporate obligations, and stocks, preferred
or common, which persons of prudence, discretion, and intelligence acquire for
their own account.
Sec. 3. RCW 11.100.035 and 1994
c 221 s 68 are each amended to read as follows:
(1) Within the
standards of judgment and care established by law, and subject to any express
provisions or limitations contained in any particular trust instrument,
guardians, trustees, and other fiduciaries, whether individual or
corporate, are authorized to acquire and retain securities of any open-end or
closed-end management type investment company or investment trust registered
under the federal investment company act of 1940 as now or hereafter amended.
(2) Within the
limitations of subsection (1) of this section, whenever the trust instrument
directs, requires, authorizes, or permits investment in obligations of the
United States government, the ((trustee)) fiduciary may invest in
and hold such obligations either directly or in the form of securities of, or
other interests in, an open-end or closed-end management type investment
company or investment trust registered under the federal investment company act
of 1940, as now or hereafter amended, if both of the following conditions are
met:
(a) The portfolio of
the investment company or investment trust is limited to obligations of the
United States and to repurchase agreements fully collateralized by such obligations;
and
(b) The investment
company or investment trust takes delivery of the collateral for any repurchase
agreement either directly or through an authorized custodian.
(3) If the fiduciary is
a bank or trust company, then the fact that the fiduciary, or an affiliate of
the fiduciary, provides services to the investment company or investment trust
such as that of an investment advisor, custodian, transfer agent, registrar,
sponsor, distributor, manager, or otherwise, and is receiving reasonable compensation
for those services does not preclude the bank or trust company from investing
or reinvesting in the securities of the open-end or closed-end management
investment company or investment trust. The fiduciary shall furnish a copy of
the prospectus relating to the securities to each person to whom a regular
periodic accounting would ordinarily be rendered under the trust instrument or
under RCW 11.106.020, upon the request of that person. The restrictions set
forth under RCW 11.100.090 may not be construed as prohibiting the fiduciary
powers granted under this subsection.
NEW SECTION. Sec.
4. A new section is added
to chapter 11.100 RCW to read as follows:
A fiduciary shall
invest and manage the trust assets solely in the interests of the trust
beneficiaries. 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.
NEW SECTION. Sec.
5. A new section is added
to chapter 11.100 RCW to read as follows:
Subject to the
provisions of RCW 11.100.060 and any express provisions in the trust instrument
to the contrary, 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.
Sec. 6. RCW 11.100.130 and 1985
c 30 s 77 are each amended to read as follows:
Whenever power or
authority to direct or control the acts of a ((trustee)) fiduciary
or the investments of a trust is conferred directly or indirectly upon any
person other than the designated trustee of the trust, such person shall be
deemed to be a fiduciary and shall be liable to the beneficiaries of ((said))
the trust and to the designated trustee to the same extent as if he or
she were a designated trustee in relation to the exercise or nonexercise of
such power or authority.
NEW SECTION. Sec.
7. This act applies
prospectively only and not retroactively.
NEW SECTION. Sec.
8. This act is necessary for
the immediate preservation of the public peace, health, or safety, or support
of the state government and its existing public institutions, and shall take
effect July 1, 1995.
