AI-assisted research summary: Guardians, executors, administrators, and trustees may invest funds in specified bonds and related obligations, and may lend on those bonds up to 85% of face value, unless a will or deed requires a different investment mode.
Guardians, executors, administrators and trustees shall also be authorized and empowered to invest money and funds in their hands in the bonds of the state, of the United States, or obligations issued separately or collectively by or for federal land banks, federal intermediate credit banks and banks for cooperatives under the act of congress known as the Farm Credit Act of 1971 (85 Stat. 583, 12 U.S.C. § 2001 et seq.) and amendments to that act, or in obligations issued under the Home Owner's Loan Act of congress ( 12 U.S.C. § 1461 et seq.), or notes or bonds secured by mortgage or trust deed insured by the federal housing administrator, or bonds and/or debentures issued by national mortgage associations; also to lend on the security of any such bonds to the extent of eighty-five percent (85%) of their face value; and, in either case, make report thereof to the court where the guardian, executor, administrator or trustee is qualified, unless another mode of investment is required by will or deed of the testator or another person who has established the funds. Acts 1865, ch. 19, § 2; Shan., § 4281; Acts 1925, ch. 9, § 1; Shan. Supp., § 4281a4; mod. Code 1932, § 8497; Acts 1935, ch. 136, § 1; 1935, ch. 187, § 1; 1937, ch. 75, § 1; C. Supp. 1950, § 8497; Acts 1976, ch. 585, § 2; T.C.A. (orig. ed.), § 35-312. NOTES TO DECISIONS 1. Application of Section. 2. Provisions not Mandatory. 3. Rule of Prudent Investment. 1. Application of Section. This section by its own terms does not apply to the clerk and master of the chancery court. Steinberg v. Cox, 24 Tenn. App. 340, 144 S.W.2d 12, 1939 Tenn. App. LEXIS 16 (Tenn. Ct. App. 1939). 2. Provisions not Mandatory. This section is not mandatory, but is intended to authorize by specific reference thereto the investment of the trust funds in certain property or securities listed or named, and is therefore permissive. Falls v. Carruthers, 20 Tenn. App. 681, 103 S.W.2d 605, 1936 Tenn. App. LEXIS 59 (Tenn. Ct. App. 1936). 3. Rule of Prudent Investment. Losses suffered by the trust corpus due to bad investments cannot be recovered from the trustee personally if he acted in good faith and as a prudent businessman would in the conduct of his own affairs even though the investments are other than permitted by statute since the statutory authorizations are permissive only. Falls v. Carruthers, 20 Tenn. App. 681, 103 S.W.2d 605, 1936 Tenn. App. LEXIS 59 (Tenn. Ct. App. 1936).