New Jersey § 17:9a-35

§ 17:9a-35.

A. All moneys, securities and other property held by a qualified bank in fiduciary

capacities, pursuant to paragraphs (5), (6), (7), (8), (9) and (10) of section 28, 1 shall be kept separate and apart from the moneys, securities and other property belonging

to such bank, and such moneys, securities and other property shall not be liable for

the debts or obligations of the bank; except that moneys held by a qualified bank

in one or more such fiduciary capacities, awaiting investment or disbursement, may

be deposited in a single account or in separate accounts with itself or with any other

banking institution or with any bank, trust company or national banking association

having its principal office in any other state. Moneys so deposited with itself may be used by the bank in the conduct of its business. Securities held by a qualified bank in fiduciary capacities may also be deposited

with any other banking institution, or with any bank, trust company or national banking

association having its principal office in any other state. The duties of the depository in respect to securities so deposited with it shall

be confined to the safekeeping thereof, the collection of interest thereon for the

account of the depositing qualified bank, and the performance of such other clerical

or ministerial acts as the depositing qualified bank may from time to time request. Nothing herein contained shall be construed as relieving the depositing qualified

bank from the duty to account for all securities deposited as authorized by this subsection. B. In the event of the insolvency of a qualified bank which has deposited such moneys

with itself, such bank in such fiduciary capacities shall have claims against the

assets of the bank for moneys so deposited, preferred over claims not otherwise entitled

to preference, but subordinate to all other claims which shall be entitled to preference. In the event of the insolvency of any other banking institution or of any bank,

trust company or national banking association having its principal office in any other

state, in which such moneys shall have been deposited, a qualified bank which shall

have made such deposits shall be liable for the amount of such deposits as if such

deposits had been made with it, and shall be subrogated to its claims as fiduciary

against the insolvent banking institution, bank, trust company or national banking

association in which such deposits shall have been made. C. Notwithstanding any other provisions of law, any qualified bank 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 with the Federal Reserve bank in its district, any securities so held,

the principal and interest of which the United States of America or any department,

agency or instrumentality thereof has agreed to pay, or has guaranteed payment. Securities so deposited shall be credited to one or more accounts on the books of

such Federal Reserve bank in the name of such qualified bank or such banking institution,

to be designated fiduciary or safekeeping accounts, to which other similar securities

may be deposited. The records of such qualified bank 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 so deposited. Ownership of, and other interests in, such securities may be transferred by bookkeeping

entry on the books of such Federal Reserve bank without physical delivery of certificates

representing such securities. A qualified bank or banking institution depositing securities pursuant to this section

shall be subject to such rules and regulations as, in the case of State-chartered

institutions, the commissioner, and in the case of national banks, the comptroller

of the currency, may from time to time issue. A qualified bank or banking institution acting as custodian for a fiduciary shall,

on demand by the fiduciary, certify in writing to the fiduciary the securities so

deposited by such qualified bank or banking institution with such Federal Reserve

bank for the account of such fiduciary. A qualified bank shall, on demand by any party to a judicial proceeding for the

settlement of such qualified bank's account as fiduciary, or on demand by the attorney

for such party, certify in writing to such party the securities deposited by such

qualified bank with such Federal Reserve bank for its account as fiduciary. This subsection shall apply to any qualified bank or banking institution holding

securities in a fiduciary, custodial or management capacity, acting on the effective

date of this act or who thereafter may act, regardless of the date of the agreement,

instrument or court order pursuant to which such qualified bank or banking institution

is acting. Nothing contained in this subsection shall be construed as relieving a qualified

bank or banking institution depositing securities as authorized by this subsection

from the duty to account for all securities so deposited. D. (1) For each account held by a qualified bank in a fiduciary capacity, pursuant

to paragraph (5), (6), (7), (8), (9), or (10) of section 28 of P.L. 1948, c. 67 ( C. 17:9A-28 ), all moneys in excess of $100.00, whether income or principal, which are awaiting

investment or disbursement, which are not otherwise subject to direction regarding

investment and which are not held for distribution on a monthly basis, shall be invested

by the qualified bank or deposited with the qualified bank or with another qualified

bank, as set forth in this paragraph. The bank shall invest or deposit that portion of the moneys in excess of $100.00

within seven business days of the account receiving or accumulating the $100.00 or

more. The investment or deposit shall be in accordance with the “Prudent Investment Law,” N.J.S. 3B:20-12 et seq. , and shall produce a rate of return commensurate with the short-term market rate

of return then prevailing. If notice is given pursuant to paragraph (2) of this subsection, in addition to

other compensation that the qualified bank is otherwise entitled to by law for services

as a fiduciary, it shall be entitled to pay itself out of the income earned on the

investment or deposit for its reasonable charges for the maintenance and administration

of the services referred to in this subsection. A qualified bank shall not be required to perform these investment services if it

is not permitted under the terms of the instrument governing the fiduciary capacity

in which it serves, or by the person empowered to direct investments, to receive reasonable

compensation for providing these services, unless the qualified bank expressly agrees

to provide the investment services without compensation. (2) The qualified bank shall notify its customers who are receiving or who will receive

the investment services set forth in this subsection of the basis of the bank's charges

for the services or any change in the basis of the bank's charges for the services. The notice shall be in writing and may be sent by regular mail and may be included

with the periodic account statement. Notice given at any time prior to the institution of the services or within 30 days

after the institution of the services, or any change in the basis of the bank's charges

for the services, shall be in compliance with this paragraph. For the purposes of this paragraph, “customer” means the person or persons who receive

the periodic account statements issued by the qualified bank. E. A qualified bank acting in a fiduciary capacity is authorized, in the absence of

an express provision to the contrary, whenever a law, regulation, governing instrument

or order directs, requires, authorizes or permits investment in United States government

obligations, to invest in those obligations, either directly or in the form of securities

of, or other interests in, any open-end or closed-end management investment company

or investment trust registered under the “Investment Company Act of 1940,” 54 Stat.

847 ( 15 U.S.C. § 80a-1 et seq. ), if the portfolio of that investment company or investment trust is limited to United

States government obligations and to repurchase agreements fully collateralized by

United States government obligations, which collateral shall be delivered to or held

by the investment company or investment trust, either directly or through an authorized

custodian. Nothing in this subsection shall alter the power of a qualified bank to otherwise

invest funds or assets which it may receive and hold in a fiduciary capacity, nor

shall anything in this subsection affect the degree of prudence and judgment which

is required of qualified banks generally. 1

N.J.S.A. § 17:9A-28.