State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_32 > GS_32-27

§ 32‑27.  Powers whichmay be incorporated by reference in trust instrument. The following powers maybe incorporated by reference as provided in G.S. 32‑26:

(1)        Retain OriginalProperty. – To retain for such time as the fiduciary shall deem advisable any property,real or personal, which the fiduciary may receive, even though the retention ofsuch property by reason of its character, amount, proportion to the totalestate or otherwise would not be appropriate for the fiduciary apart from thisprovision.

(2)        Sell and ExchangeProperty. – To sell, exchange, give options upon, partition or otherwisedispose of any property or interest therein which the fiduciary may hold fromtime to time, with or without order of court, at public or private sale orotherwise, upon such terms and conditions, including credit, and for suchconsideration as the fiduciary shall deem advisable, and to transfer and conveythe property or interest therein which is at the disposal of the fiduciary, infee simple absolute or otherwise, free of all trust; and the party dealing withthe fiduciary shall not be under a duty to follow the proceeds or otherconsideration received by the fiduciary from such sale or exchange.

(3)        Invest and Reinvest.– To invest and reinvest, as the fiduciary shall deem advisable, in stocks(common or preferred), bonds, debentures, notes, mortgages or other securities,in or outside the United States; in insurance contracts on the life of anybeneficiary or of any person in whom a beneficiary has an insurable interest,or in annuity contracts for any beneficiary, in any real or personal property,in investment trusts; in participations in common trust funds, and generally insuch property as the fiduciary shall deem advisable, even though suchinvestment shall not be of the character approved by applicable law but forthis provision.

(4)        Invest withoutDiversification. – To make investments which cause a greater proportion of thetotal property held by the fiduciary to be invested in investments of one typeor of one company than would be considered appropriate for the fiduciary apartfrom this provision.

(5)        Continue Business. –To the extent and upon such terms and conditions and for such periods of timeas the fiduciary shall deem necessary or advisable, to continue or participatein the operation of any business or other enterprise, whatever its form oforganization, including but not limited to the power:

a.         To effectincorporation, dissolution, or other change in the form of the organization ofthe business or enterprise;

b.         To dispose of anyinterest therein or acquire the interest of others therein;

c.         To contributethereto or invest therein additional capital or to lend money thereto, in anysuch case upon such terms and conditions as the fiduciary shall approve fromtime to time;

d.         To determine whetherthe liabilities incurred in the conduct of the business are to be chargeablesolely to the part of the estate or trust set aside for use in the business orto the estate or trust as a whole; and

e.         In all cases inwhich the fiduciary is required to file accounts in any court or in any otherpublic office, it shall not be necessary to itemize receipts and disbursementsand distributions of property but it shall be sufficient for the fiduciary toshow in the account a single figure or consolidation of figures, and thefiduciary shall be permitted to account for money and property received fromthe business and any payments made to the business in lump sum withoutitemization.

(6)        Form Corporation orOther Entity. – To form a corporation or other entity and to transfer, assign,and convey to such corporation or entity all or any part of the estate or ofany trust property in exchange for the stock, securities or obligations of anysuch corporation or entity, and to continue to hold such stock and securitiesand obligations.

(7)        Operate Farm. – Tocontinue any farming operation received by the fiduciary pursuant to the willor other instrument and to do any and all things deemed advisable by thefiduciary in the management and maintenance of such farm and the production andmarketing of crops and dairy, poultry, livestock, orchard and forest productsincluding but not limited to the following powers:

a.         To operate the farmwith hired labor, tenants or sharecroppers;

b.         To lease or rent thefarm for cash or for a share of the crops;

c.         To purchase orotherwise acquire farm machinery and equipment and livestock;

d.         To construct,repair, and improve farm buildings of all kinds needed in the fiduciary'sjudgment, for the operation of the farm;

e.         To make or obtainloans or advances at the prevailing rate or rates of interest for farm purposessuch as for production, harvesting, or marketing, or for the construction,repair, or improvement of farm buildings, or for the purchase of farm machineryor equipment or livestock;

f.          To employ approvedsoil conservation practices in order to conserve, improve, and maintain thefertility and productivity of the soil;

g.         To protect, manageand improve the timber and forest on the farm and sell the timber and forestproducts when it is to the best interest of the estate;

h.         To ditch, dam anddrain damp or wet fields and areas of the farm when and where needed;

i.          To engage in theproduction of livestock, poultry or dairy products, and to construct suchfences and buildings and plant such pastures and crops as may be necessary tocarry on such operations;

j.          To market theproducts of the farm; and

k.         In general, toemploy good husbandry in the farming operation.

(8)        Manage RealProperty. –

a.         To improve, manage,protect, and subdivide any real property;

b.         To dedicate orwithdraw from dedication parks, streets, highways, or alleys;

c.         To terminate anysubdivision or part thereof;

d.         To borrow money forthe purposes authorized by this subdivision for such periods of time and uponsuch terms and conditions as to rates, maturities and renewals as the fiduciaryshall deem advisable and to mortgage or otherwise encumber any such property orpart thereof, whether in possession or reversion;

e.         To lease any suchproperty or part thereof to commence at the present or in the future, upon suchterms and conditions, including options to renew or purchase, and for suchperiod or periods of time as the fiduciary deems advisable although such periodor periods may extend beyond the duration of the trust or the administration ofthe estate involved;

f.          To make gravel,sand, oil, gas and other mineral leases, contracts, licenses, conveyances orgrants of every nature and kind which are lawful in the jurisdiction in whichsuch property lies;

g.         To manage andimprove timber and forests on such property, to sell the timber and forestproducts, and to make grants, leases, and contracts with respect thereto;

h.         To modify, renew orextend leases;

i.          To employ agents torent and collect rents;

j.          To create easementsand release, convey, or assign any right, title, or interest with respect toany easement on such property or part thereof;

k.         To erect, repair orrenovate any building or other improvement on such property, and to remove ordemolish any building or other improvement in whole or in part; and

l.          To deal with anysuch property and every part thereof in all other ways and for such otherpurposes or considerations as it would be lawful for any person owning the sameto deal with such property either in the same or in different ways from thosespecified elsewhere in this subdivision (8).

(8a)      Comply withenvironmental law. –

a.         To inspect propertyheld by the fiduciary, including interests in sole proprietorships,partnerships, or corporations and any assets owned by any such businessenterprise, for the purpose of determining compliance with environmental lawaffecting such property and to respond to any actual or threatened violation ofany environmental law affecting property held by the fiduciary;

b.         To take, on behalfof the estate or trust, any action necessary to prevent, abate, or otherwiseremedy any actual or threatened violation of any environmental law affectingproperty held by the fiduciary, either before or after the initiation of anenforcement action by any governmental body;

c.         To refuse to acceptproperty in trust if the fiduciary determines that any property to be donatedto the trust either is contaminated by any hazardous substance or is being usedor has been used for any activity directly or indirectly involving hazardoussubstance which could result in liability to the trust or otherwise impair thevalue of the assets held therein;

d.         To settle orcompromise at any time any and all claims against the trust or estate which maybe asserted by any governmental body or private party involving the allegedviolation of any environmental law affecting property held in trust or in anestate;

e.         To disclaim anypower granted by any document, statute, or rule of law which, in the solediscretion of the fiduciary, may cause the fiduciary to incur personalliability under any environmental law;

f.          To decline to serveas a fiduciary if the fiduciary reasonably believes that there is or may be aconflict of interest between it in its fiduciary capacity and in its individualcapacity because of potential claims or liabilities which may be assertedagainst it on behalf of the trust or estate because of the type or condition ofassets held therein.

g.         For purposes of thissubsection "environmental law" means any federal, state, or locallaw, rule, regulation, or ordinance relating to protection of the environmentor human health. For purposes of this subsection, "hazardoussubstances" means any substance defined as hazardous or toxic or otherwiseregulated by any environmental law. The fiduciary shall be entitled to chargethe cost of any inspection, review, abatement, response, cleanup, or remedialaction authorized herein against the income or principal of the trust orestate. A fiduciary shall not be personally liable to any beneficiary or otherparty for any decrease in value of assets in trust or in an estate by reason ofthe fiduciary's compliance with any environmental law, specifically includingany reporting requirement under such law. Neither the acceptance by thefiduciary of property or a failure by the fiduciary to inspect property shallbe deemed to create any inference as to whether or not there is or may be anyliability under any environmental law with respect to such property.

(9)        Pay Taxes andExpenses. – To pay taxes, assessments, compensation of the fiduciary, and otherexpenses incurred in the collection, care, administration, and protection ofthe trust or estate.

(10)      Receive AdditionalProperty. – To receive additional property from any source and administer suchadditional property as a portion of the appropriate trust or estate under themanagement of the fiduciary; provided the fiduciary shall not be required toreceive such property without the fiduciary's consent.

(11)      Deal with OtherTrusts. – In dealing with one or more fiduciaries:

a.         To sell property,real or personal, to, or to exchange property with, the trustee of any trustwhich the decedent or the settlor or his spouse or any child of his shall havecreated, for such estates and upon such terms and conditions as to sale price,terms of payment, and security as to the fiduciary shall seem advisable; andthe fiduciary shall be under no duty to follow the proceeds of any such sale; and

b.         To borrow money forsuch periods of time and upon such terms and conditions as to rates,maturities, renewals and securities as the fiduciary shall deem advisable fromany trust created by the decedent, his spouse, or any child of his, for thepurpose of paying debts of the decedent, taxes, the costs of the administrationof the estate, and like charges against the estate, or any part thereof, ordischarging the liability of any fiduciary thereof and to mortgage, pledge orotherwise encumber such portion of the estate or any trust as may be requiredto secure such loan or loans and to renew such loans.

(12)      Borrow Money. – Toborrow money for such periods of time and upon such terms and conditions as torates, maturities, renewals, and security as the fiduciary shall deemadvisable, including the power of a corporate fiduciary to borrow from its ownbanking department, for the purpose of paying debts, taxes, or other chargesagainst the estate or any trust, or any part thereof, and to mortgage, pledge orotherwise encumber such portion of the estate or any trust as may be requiredto secure such loan or loans; and to renew existing loans either as maker orendorser.

(13)      Make Advances. – Toadvance money for the protection of the trust or estate, and for all expenses,losses and liabilities sustained in the administration of the trust or estateor because of the holding or ownership of any trust or estate assets, for whichadvances with any interest the fiduciary shall have a lien on the assets of thetrust or estate as against a beneficiary.

(14)      Vote Shares. – Tovote shares of stock owned by the estate or any trust at stockholders meetingsin person or by special, limited, or general proxy, with or without power ofsubstitution.

(15)      Register in Name of Nominee.– To hold a security in the name of a nominee or in other form withoutdisclosure of the fiduciary relationship so that title to the security may passby delivery, but the fiduciary shall be liable for any act of the nominee inconnection with the stock so held.

(16)      Exercise Options,Rights, and Privileges. – To exercise all options, rights, and privileges toconvert stocks, bonds, debentures, notes, mortgages, or other property intoother stocks, bonds, debentures, notes, mortgages, or other property; tosubscribe for other or additional stocks, bonds, debentures, notes, mortgages,or other property; and to hold such stocks, bonds, debentures, notes,mortgages, or other property so acquired as investments of the estate or trustso long as the fiduciary shall deem advisable.

(17)      Participate inReorganizations. – To unite with other owners of property similar to any whichmay be held at any time in the decedent's estate or in any trusts in carryingout any plan for the consolidation or merger, dissolution or liquidation,foreclosure, lease, or sale of the property, incorporation or reincorporation,reorganization or readjustment of the capital or financial structure of anycorporation, company or association the securities of which may form any portionof an estate or trust; to become and serve as a member of a stockholders orbondholders protective committee; to deposit securities in accordance with anyplan agreed upon; to pay any assessments, expenses, or sums of money that maybe required for the protection or furtherance of the interest of thedistributees of an estate or beneficiaries of any trust with reference to anysuch plan; and to receive as investments of an estate or any trust anysecurities issued as a result of the execution of such plan.

(18)      Reduce InterestRates. – To reduce the interest rate from time to time on any obligation,whether secured or unsecured, constituting a part of an estate or trust.

(19)      Renew and ExtendObligations. – To continue any obligation, whether secured or unsecured, uponand after maturity with or without renewal or extension upon such terms as thefiduciary shall deem advisable, without regard to the value of the security, ifany, at the time of such continuance.

(20)      Foreclose and Bid in.– To foreclose, as an incident to the collection of any bond, note or otherobligation, any mortgage, deed of trust, or other lien securing such bond, noteor other obligation, and to bid in the property at such foreclosure sale, or toacquire the property by deed from the mortgagor or obligor without foreclosure;and to retain the property so bid in or taken over without foreclosure.

(21)      Insure. – To carrysuch insurance coverage, including public liability, for such hazards and insuch amounts, either in stock companies or in mutual companies, as thefiduciary shall deem advisable.

(22)      Collect. – Tocollect, receive, and receipt for rents, issues, profits, and income of anestate or trust.

(23)      Litigate, Compromiseor Abandon. – To compromise, adjust, arbitrate, sue on or defend, abandon, orotherwise deal with and settle claims in favor of or against the estate ortrust as the fiduciary shall deem advisable, and the fiduciary's decision shallbe conclusive between the fiduciary and the beneficiaries of the estate or trustand the person against or for whom the claim is asserted, in the absence offraud by such persons; and in the absence of fraud, bad faith or grossnegligence of the fiduciary, shall be conclusive between the fiduciary and thebeneficiaries of the estate or trust.

(24)      Employ and CompensateAgents, etc. – To employ and compensate, out of income or principal or both andin such proportion as the fiduciary shall deem advisable, persons deemed by thefiduciary needful to advise or assist in the proper settlement of the estate oradministration of any trust, including, but not limited to, agents,accountants, brokers, attorneys‑at‑law, attorneys‑in‑fact,investment brokers, rental agents, realtors, appraisers, and tax specialists;and to do so without liability for any neglect, omission, misconduct, ordefault of such agent or representative provided he was selected and retainedwith due care on the part of the fiduciary.

(25)      Acquire and HoldProperty of Two or More Trusts Undivided. – To acquire, receive, hold andretain the principal of several trusts created by a single instrument undivideduntil division shall become necessary in order to make distributions; to hold,manage, invest, reinvest, and account for the several shares or parts of sharesby appropriate entries in the fiduciary's books of account, and to allocate toeach share or part of share its proportionate part of all receipts andexpenses; provided, however, that the provisions of this subdivision shall notdefer the vesting in possession of any share or part of share of the estate ortrust.

(25a)    Divide One Trust intoSeveral Trusts and Make Distributions From Those Trusts. –

a.         To divide the fundsand properties constituting any trusts into two or more identical separatetrusts that represent two or more fractional shares of the funds and propertiesbeing divided, or to hold any addition or contribution to an existing trust asa separate, identical trust, and to make distributions of income and principalby a method other than pro rata from the separate trusts so created as thefiduciary determines to be in the best interests of the trust beneficiaries. Inany case where two separate, identical trusts are created pursuant to this sub‑subdivision,one of which is fully exempt from the federal generation‑skippingtransfer tax and one of which is fully subject to that tax, the fiduciary maythereafter, to the extent possible consistent with the terms of the governinginstrument, determine the value of any mandatory or discretionary distributionsto trust beneficiaries on the basis of the combined value of both trusts, butmay satisfy such distributions from the separate trusts in a manner designed tominimize the current and potential generation‑skipping transfer tax.

b.         To divide the fundsand properties constituting any trusts into two or more separate, nonidenticaltrusts if (i) the new trusts so created are not inconsistent with the terms ofthe governing instrument; and (ii) the terms of the new trusts provide in theaggregate for the same succession of interests and beneficiaries as areprovided in the original trust.

c.         To fund the newtrusts created pursuant to the authority granted under this subdivision either(i) by pro rata allocation of the assets of the original trust; (ii) based uponthe fair market value of the assets at the date of division; or (iii) in amanner fairly reflecting the net appreciation or depreciation of the trustassets measured from the valuation date to the date of division.

(25b)    Consolidate SimilarTrusts. – When the trustee is trustee of more than one trust, the terms ofwhich are substantially similar and the beneficiaries of which are identical,to consolidate the assets of those trusts and administer the assets as onetrust under the terms of one of the trusts.

(26)      Establish andMaintain Reserves. – To set up proper and reasonable reserves for taxes,assessments, insurance premiums, depreciation, obsolescence, amortization,depletion of mineral or timber properties, repairs, improvements, and generalmaintenance of buildings or other property out of rents, profits, or otherincome received; and to set up reserves also for the equalization of paymentsto or for beneficiaries; provided, however, that the provisions of thissubdivision shall not affect the ultimate interests of beneficiaries in suchreserves.

(27)      Distribute in Cash orKind. – To make distribution of capital assets of the estate or trust in kindor in cash, or partially in kind and partially in cash, in divided or undividedinterests, either pro rata or by a method other than pro rata among alldistributees, without regard to the income tax basis or other special taxattributes of such assets, as the fiduciary finds to be most practicable andfor the best interests of the distributees; and to determine the value ofcapital assets for the purpose of making distribution thereof if and when therebe more than one distributee thereof, which determination shall be binding uponthe distributees unless clearly capricious, erroneous and inequitable;provided, however, that the fiduciary shall not exercise any power under thissubdivision unless the fiduciary holds title to or an interest in the propertyto be distributed and is required or authorized to make distribution thereof.

(28)      Pay to or for Minorsor Incompetents. – To make payments in money, or in property in lieu of money,to or for a minor or incompetent in any one or more of the following ways:

a.         Directly to suchminor or incompetent;

b.         To apply directly inpayment for the support, maintenance, education, and medical, surgical,hospital, or other institutional care of such minor or incompetent;

c.         To the legal ornatural guardian of such minor or incompetent;

d.         To any other person,whether or not appointed guardian of the person by any court, who shall, infact, have the care and custody of the person of such minor or incompetent.

            Thefiduciary shall not be under any duty to see to the application of the paymentsso made, if the fiduciary exercised due care in the selection of the person,including the minor or incompetent, to whom such payments were made; and thereceipt of such person shall be full acquittance to the fiduciary.

(28a)    Pay to Custodian UnderUniform Gifts or Transfers to Minors Act. – To make any distribution of incomeor principal, including real property, for the benefit of any distributee to acustodian under the North Carolina Uniform Transfers to Minors Act, Chapter 33Aof the General Statutes, or under the provisions of any similar statute in thestate where the minor or the custodian resides. Unless a custodian isspecifically named in the governing instrument, the fiduciary shall haveabsolute discretion to nominate any qualified individual or financialinstitution, including the fiduciary, to serve as custodian, and to nominate oneor more substitute custodians.

(29)      Apportion andAllocate Receipts and Expenses. – Where not otherwise provided by the UniformPrincipal and Income Act of 2003 as contained in Chapter 37A of the GeneralStatutes, to determine:

a.         What is principaland what is income of any estate or trust and to allocate or apportion receiptsand expenses as between principal and income in the exercise of the fiduciary'sdiscretion, and, by way of illustration and not limitation of the fiduciary'sdiscretion, to charge premiums on securities purchased at a premium againstprincipal or income or partly against each;

b.         Whether to applystock dividends and other noncash dividends to income or principal or apportionthem as the fiduciary shall deem advisable; and

c.         What expenses,costs, taxes (other than estate, inheritance, and succession taxes and othergovernmental charges) shall be charged against principal or income orapportioned between principal and income and in what proportions.

(30)      Make Contracts andExecute Instruments. – To make contracts and to execute instruments, under sealor otherwise, as may be necessary in the exercise of the powers herein granted.

(31)      The foregoing powersshall be limited as follows for any trust which shall be classified as a"private foundation" as that term is defined by section 509 of theInternal Revenue Code of 1954 or corresponding provisions of any subsequentfederal tax laws (including each nonexempt charitable trust described insection 4947(a)(1) of the code which is treated as a private foundation) ornonexempt split‑interest trust described in section 4947(a)(2) of theInternal Revenue Code of 1954 or corresponding provisions of any subsequentfederal tax laws (but only to the extent that section 508(e) of the code isapplicable to such nonexempt split‑interest trust under section4947(a)(2)):

a.         The fiduciary shallmake distributions of such amounts, for each taxable year, at such time and insuch manner as not to become subject to the tax imposed by section 4942 of theInternal Revenue Code of 1954, or corresponding provisions of any subsequentfederal tax laws.

b.         No fiduciary shallengage in any act of self‑dealing as defined in section 4941(d) of theInternal Revenue Code of 1954, or corresponding provisions of any subsequentfederal tax laws.

c.         No fiduciary shallretain any excess business holdings as defined in section 4943(c) of theInternal Revenue Code of 1954, or corresponding provisions of any subsequentfederal tax laws.

d.         No fiduciary shallmake any investments in such manner as to subject the trust to tax undersection 4944 of the Internal Revenue Code of 1954, or corresponding provisionsof any subsequent federal tax laws.

e.         No fiduciary shallmake any taxable expenditures as defined in section 4945(d) of the InternalRevenue Code of 1954, or corresponding provisions of any subsequent federal taxlaws. (1965, c.628, s. 1; 1967, c. 24, s. 15; c. 956; 1971, c. 1136, s. 3; 1977, c. 30; 1989,c. 652, s. 20; 1991, c. 192, s. 1; 1995, c. 235, ss. 1‑3; 1997‑456,s. 27; 1999‑144, s. 1; 2003‑232, s. 3.)