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Subchapter 001: GENERAL POWERS
§ 14101. Applicability of chapter
The provisions of this chapter set forth the powers granted to all financial institutions
organized pursuant to chapters 202 and 203 of this title and branches of any state
or foreign financial institution authorized under section 15202 or 15203 of this title. The powers, privileges, duties, and restrictions conferred and imposed in the organizational
documents or act of incorporation of any commercial bank, savings bank, savings and
loan association, bank and trust company, or trust subsidiaries organized under the
prior laws of this State are abridged, enlarged, or modified so that each such charter
or act of incorporation conforms to this title. Notwithstanding anything in a charter
or act of incorporation of such an institution, every such institution possesses the
powers, rights, and privileges and is subject to the duties, restrictions, and liabilities
conferred and imposed by this title. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14102. General organizational powers
(a) A Vermont financial institution shall have all of the powers enumerated in Title 11
or 11A, depending on the organizational form of the institution.
(b) Unless otherwise prohibited or limited by part 1, 2, or 5 of this title, a Vermont
financial institution has and may exercise all powers necessary or convenient to effect
the purposes for which the financial institution is organized or to further the businesses
in which the financial institution is or may be lawfully engaged. Such powers shall
include:
(1) establishing, acquiring, investing, or participating in or utilizing a service corporation;
(2) engaging, directly or indirectly through an operating subsidiary, in closely related
activities as defined in subdivision 11101(14) of this title; and
(3) investing or participating in an entity that engages in closely related activities
but is not an operating subsidiary, with the Commissioner’s approval; provided, however,
the Commissioner may require that closely related activities be conducted through
a subsidiary whenever the Commissioner determines that a limitation on the Vermont
financial institution’s direct financial risk is prudent. A Vermont financial institution
shall keep such records as may be required by the Commissioner relative to the activities
permitted by this subsection. Service corporations and operating subsidiaries shall
be subject to regulation and supervision under this title.
(c) A Vermont financial institution may engage in electronic banking.
(d) Any Vermont financial institution may amend its organizational documents to provide
for the separation of its corporate franchises into separate departments according
to the nature of its business. In that event, it shall equitably apportion its assets
between those departments in such manner as the Commissioner shall approve and thereafter
shall maintain a segregation of the assets and obligations of those departments. Depositors
shall be notified of the segregation and of the department to which their deposits
are assigned. In case of liquidation or the imposition of restrictions upon the payment
of deposits, at any time more than six months after such notice, the depositors of
each of the departments shall be entitled to receive payment of deposits out of the
assets of the department to which their deposits have been assigned in priority to
all depositors in the other department, and to creditors who become such after the
segregation, except as those obligations to creditors are properly allocated to a
department at the time the obligations are created. The assets of the trust department
shall be devoted first to meeting the obligations of the financial institution to
the beneficiaries of its trusts according to their respective rights.
(e) A Vermont financial institution shall have the power to join the Federal Reserve System
or any cooperative league or other entity organized for the purpose of protecting
and promoting the welfare of financial institutions and their depositors and to comply
with all conditions of membership. A Vermont financial institution that is a member
of the Federal Reserve Bank is by this subsection vested with all powers conferred
upon member banks of the Federal Reserve System by the terms of the Federal Reserve
Act as fully and completely as if those powers were specifically enumerated and described
in this subsection, and all those powers shall be exercised subject to all restrictions
and limitations imposed by the Federal Reserve Act or by regulations of the Federal
Reserve Board made pursuant to the Act. A member financial institution under this
subsection shall continue to be subject to the supervision and examinations required
by the laws of this State, except that the Federal Reserve Board and the Federal Deposit
Insurance Corporation shall have the right, if deemed necessary, to make examinations.
The authorities of this State having supervision over the financial institution may
disclose to the Federal Reserve Board or to the Federal Deposit Insurance Corporation
or to their duly appointed examiners all information in reference to the affairs of
any financial institution that has become or desires to become a member.
(f) Subject to the approval of the Commissioner, a Vermont financial institution may contract
with another financial institution or financial institutions for branch or agency
services or to provide those services to the customers of that financial institution
or financial institutions.
Notwithstanding the foregoing sentence, any Vermont financial institution subsidiary
of a bank holding company may receive deposits, renew time deposits, close loans,
service loans, and receive payments on loans and other obligations as an agent for
an affiliate depository institution or contract to receive such services without such
approval. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 292, eff. July 1, 2022.)
§ 14103. Advertising; doing business or using name unlawfully
No person shall advertise or put forth any sign as a bank, banking association, or
trust company, or in any way solicit or receive deposits or transact business as a
bank, banking association, financial institution, or trust company, or use the word
“bank,” “banking association,” or “trust company” or other similar sounding word or
name unless it is a financial institution reporting to and under the supervision of
the Commissioner or is authorized to conduct such business in this State under federal
law, or unless the Commissioner approves the activity or word or name used in writing
after giving due consideration for whether the activity, word, or name will confuse
or mislead the public as to the nature of the business of the entity. However, this
section shall not prevent an individual, as such, from acting in a trust capacity. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14104. Capital or surplus requirements
(a) Every Vermont financial institution shall establish and maintain adequate levels of
capital or surplus pursuant to standards established by the Commissioner.
(b) Any issuance considered as capital under subsection (a) of this section shall be submitted
to the Commissioner for review and approval at least 10 days prior to issuance and
include such documentation as the Commissioner deems necessary.
(c) Notwithstanding the provisions of subsections (a) and (b) of this section, the Commissioner
may permit the formation of a Vermont financial institution without capital or surplus
to be merged with or into or consolidated with an existing financial institution for
the purpose of facilitating a reorganization or acquisition transaction, including
a triangular merger transaction, involving such existing financial institution. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14105. Participation in public agencies
A financial institution has the power to participate in a public agency created under
the laws of this State or of the United States, the purpose of which is to afford
advantages or safeguards to financial institutions, depositors, or investors and to
comply with all requirements and conditions imposed upon such participants except
to the extent limited by rule or order of the Commissioner. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14106. Expanded powers of Vermont financial institutions
In addition to all other powers permitted under these statutes, any Vermont financial
institution shall have the powers conferred under federal law administered by the
Federal Reserve Board, the Office of the Comptroller of the Currency, the FDIC, the
Consumer Financial Protection Bureau, or other federal banking regulator upon national
financial institutions or their subsidiaries. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 139 (Adj. Sess.), § 5, eff. May 27, 2022.)
§ 14107. Investments
(a) A Vermont financial institution may invest its assets prudently in accordance with
the best judgment of its governing body in a manner consistent with this section.
(b) A Vermont financial institution may not acquire more than five percent of the equity
interest of any Vermont financial institution or of a Vermont bank holding company
without the prior approval of the Commissioner.
(c) Notwithstanding any other provision of law to the contrary, a financial institution
may invest its funds, operate a business, manage or deal in property, or take any
other action over whatever period of time may reasonably be necessary to avoid loss
on an investment or loan previously made or an obligation created in good faith.
(d) A Vermont financial institution’s governing body shall establish a written investment
policy, which it shall review and ratify at least annually, that addresses, at a minimum,
the following:
(1) investment quality parameters;
(2) investment mix and diversification;
(3) investment maturities; and
(4) delegation of authority to officers and committees responsible for administering the
portfolio.
(e) A Vermont financial institution shall not acquire a lien on its equity interests as
collateral for any extension of credit or other obligation nor acquire title to such
collateral except to prevent loss upon a loan or investment previously made or an
obligation created in good faith. If a Vermont financial institution acquires such
a lien upon its equity interest or acquires title to such equity interest under the
exception in this subsection, it shall not permit the lien to continue for more than
two years, nor shall it hold title to the equity interest for more than one year,
without the consent of the Commissioner.
(f) Except as otherwise provided in subsection (e) of this section, and subject to chapter
202, subchapter 4 and chapter 203, subchapter 2 of this title, a Vermont financial
institution may repurchase or redeem its own equity interests. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14108. Prohibited mergers and acquisitions
(a) No depository institution may by merger, consolidation, or other form of acquisition
come to hold in excess of 30 percent of the total time and demand deposits held in
Vermont by depository institutions. For the purposes of this section, the total deposits
of a depository institution shall consist of all time and demand deposits held in
Vermont by such depository institution and all of its affiliates.
(b) Notwithstanding subsection (a) of this section, the Commissioner may waive the deposit
concentration limit set forth in subsection (a) of this section if the Commissioner
determines that any financial institution to be merged, consolidated, or acquired
is not adequately capitalized, or is subject to a conservation, receivership, or dissolution
order under this title or applicable federal law, and the waiver is otherwise in the
best interests of depositors. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 293, eff. July 1, 2022.)
§ 14109. Prohibited management interlocks
A director or officer of a Vermont financial institution shall not at the same time
be a director or officer of another financial institution engaged in the business
of banking in the State of Vermont or a state contiguous to Vermont. The terms of
this section shall not apply to:
(1) a financial institution that is in liquidation, receivership, conservatorship or similar
proceedings;
(2) the Federal Reserve Bank of Boston;
(3) a financial institution affiliated by reason of common ownership or control of at
least 25 percent of the voting interests of such affiliated financial institutions;
or
(4) any other relationship otherwise permitted under interagency guidelines or regulations
of federal supervisory authorities adopted from time to time, relating to management
interlocks. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14110. Duties of executive officers, directors, and persons who control principal equity
interests in financial institutions; officers may not receive fees
(a) All executive officers, directors, and holders of principal equity interest of a Vermont
or state financial institution subject to the laws of this State under this title
shall comply with the standards for member banks established by Regulation O of the
Federal Reserve Board, 12 C.F.R., Part 215, as amended.
(b) An officer, director, or employee of a Vermont or state financial institution shall
not corruptly solicit or demand for the benefit of any person, or corruptly accept
or agree to accept (i) any fee, present, benefit, or commission, directly or indirectly,
from a borrower or applicant for a loan or from anyone negotiating securities at the
financial institution of which he or she is an officer, director, or employee; (ii)
any fee, present, benefit, or commission, directly or indirectly, for signing with
another as accommodation maker, surety or endorser, or for a loan made or securities
bought or sold by the financial institution, except for the benefit or profit he or
she may derive in common with other depositors or stockbrokers, and the compensation
allowed by the financial institution, for services and expenses. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
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Subchapter 002: DEPOSITS IN GENERAL
§ 14201. Deposit powers
(a) Applicability. This subchapter governs deposits or accounts in financial institutions.
(b) General deposit powers.
(1) A financial institution may receive money on deposit and may establish the terms and
conditions of each deposit contract. A financial institution may receive demand deposits
subject to withdrawal or to payment upon the depositor’s check, order, or other authorization.
(2) At the time of opening a deposit account, a financial institution shall provide the
depositor a statement containing the existing terms and conditions of the deposit
contract. The statement may be set forth on the depositor’s signature card. Depositors
and any other owners of interests in a deposit account shall be bound by changes made
by the financial institution in their deposit contracts. Financial institutions shall
provide advance notice of changes in accordance with 12 U.S.C. § 4301 et seq.
(3) A financial institution, in its sole discretion, may refuse deposits and at any time
may return all or part of a deposit.
(4) For any period during which funds are on deposit, a financial institution may pay
interest.
(c) Insurance of deposits or accounts. Except as permitted by chapter 202, subchapter 6 of this title, a Vermont financial
institution that accepts deposits or a branch of a state financial institution authorized
to do business in this State shall not accept deposits in this State unless the financial
institution is insured by the Federal Deposit Insurance Corporation.
(d) Cash reserve on deposits and accounts. A financial institution shall maintain reserves on deposits or accounts as required
from time to time by the Federal Reserve Act, as amended, and any regulations promulgated
under it. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14202. Payment of deposits to administrators from another state or country
(a) When a deposit is made in a financial institution by a person residing in another
state or country, the deposit, or any part thereof, with the interest thereon, may
be paid to the administrator or executor appointed in the state or country where the
depositor resided at the time of death, provided an administrator or executor has
not been appointed in this State at the time of such payment.
(b) An action shall not be maintained against a financial institution for the recovery
of a deposit or any part thereof, with the dividend or interest thereon, made by a
person residing in another state or country who has died, payment of which has been
made to the executor or administrator appointed in the state or country where the
depositor resided at the time of death, before the appointment of an executor or administrator
in this State. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14203. Trust deposits; payment on death of trustee
When a deposit is made in a financial institution by one or more persons in trust
for another, the name and residence of the person for whom the deposit is made shall
be disclosed, and the deposit shall be credited to the depositor or depositors as
trustee for such person. When other notice of the existence and terms of a legal trust
is not given in writing to the financial institution, at the death of the trustee,
or if there is more than one trustee, at the death of the surviving trustee, the deposit
or any part thereof, with the interest thereon, may be paid to the person for whom
the deposit was made or to his or her estate. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14204. Joint deposits
(a) Payment. When a deposit has been made in a financial institution in the names of two or more
persons, payable to any one of them, or payable to the survivors or any one of the
survivors, such deposit or any part thereof, or any interest or dividend thereon may
be paid to any one of such persons, whether the others are living or not, and the
receipt or acquittance of the person so paid shall be a valid and sufficient release
and discharge of the financial institution for any payment so made.
(b) Evidence of joint deposit. The recital of the words “payable to either or to the survivor” or words of like effect
in the order creating such account and signed by the person or persons who furnish
the funds for such deposit shall be conclusive evidence, as between the payees and
their legal representatives, of the creation of an absolute joint account. However,
nothing in this section shall prevent the proof of fraud, undue influence, or incapacity
to defeat such joint interests. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 294, eff. July 1, 2022.)
§ 14205. Payable on death accounts
(a) A “payable-on-death account” is created by a deposit in a financial institution in
the name of an account holder or several joint account holders with a designation
that the account is payable on death to one or more payees, known as “P.O.D. payees”.
On the death of the sole account holder or the last surviving joint account holder,
any remaining balance in a payable-on-death account, including interests or dividends,
shall vest solely in the surviving P.O.D. payee or equally and severally in the then
surviving P.O.D. payees. 90 days later, unless prevented as provided in subsection
(c) of this section, the financial institution may pay the remaining balance to the
new owner or owners or their legal representatives without further liability for the
amount or amounts paid. If no P.O.D. payee is surviving 90 days after the last surviving
account holder dies, the balance of the account shall be payable to the personal representative
of that account holder.
(b) Recital of the words “payable-on-death,” the abbreviation “P.O.D.,” or words of like
effect in the order creating the account, signed by the person or persons furnishing
the funds for the deposit, shall be conclusive evidence, as between the legal representatives
of account holders and the payable-on-death payees or their legal representatives,
of the creation of an absolute payable-on-death account, except as provided in subsection
(c) of this section. However, nothing in this section shall prevent proof of fraud,
undue influence, or incapacity to defeat a payable-on-death interest.
(c) If other assets of the probate estate of the last surviving account holder are insufficient
to pay debts and expenses, including statutory allowances and assignments to the surviving
spouse, a payable-on-death account shall not transfer to P.O.D. payees sums needed
for that purpose. A P.O.D. payee who receives payment from a payable-on-death account
after the death of the last surviving account holder shall be liable to the account
holder’s personal representative for the amount of payment to the extent necessary
to discharge debts and expenses remaining unpaid after application of the decedent’s
estate. No proceeding shall be commenced later than two years after the death of the
decedent. Sums recovered by the personal representative shall be administered as part
of the decedent’s estate. This section shall not affect the right of a financial institution
to make payment from a payable-on-death account to a P.O.D. payee 90 days after the
death of the last surviving account holder or make a financial institution liable
to the personal representative of the estate of a deceased account holder unless before
making payment the financial institution is served with process in a proceeding brought
by the personal representative or with an order from the Probate Division of the Superior
Court prohibiting payment. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2009, No. 154 (Adj. Sess.), § 238a, eff. Feb. 1, 2011.)
§ 14206. Deposits of minors; exemption from trustee process
(a) Payment. The governing body of a financial institution, in its discretion, may accept deposits
from a minor and may pay to a minor such sum as is deposited to the credit of such
person, and is due, as if such minor were of age. The check and receipt or acquittance
of such minor shall be a full discharge for the amount for which it is given.
(b) Minor’s deposits exempt from trustee process. A financial institution shall not be chargeable as trustee on account of funds deposited
to the credit of a minor, provided such funds are earned by or belong to such minor. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14207. Provisions when title to deposit is litigated
(a) Multiple claims. In actions against a financial institution by one spouse to recover for monies deposited
by the other spouse in the latter’s own name, the depositing spouse may be a witness.
In actions against such financial institution to recover for money on deposit, if
there is a person, whether married or not, claiming the same fund, who is not a party
to the action, the court, on the petition of such financial institution and on such
notice as it considers proper to the plaintiff and such claimant, may order the proceedings
to be amended by making such claimant a party defendant. The court shall thereupon
hear and determine the rights and interests of the parties to such action in and to
such fund.
(b) Litigated deposits; payment into court; costs. The deposits that are the subject of such action may remain with such financial institution
upon the same interest as other deposits of like amount, until final judgment in the
action, and the same shall be paid by such financial institution in accordance with
the order of the court, or the deposits may be paid into court to await the final
determination of the action. When so paid into court, the financial institution shall
no longer be a party to such action, and its liability for such deposit shall cease.
The costs in such action shall be in the discretion of the court and may be charged
upon the fund affected by the action. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 295, eff. July 1, 2022.)
§ 14208. Security for deposits
No Vermont or state financial institution may pledge, hypothecate, or deliver any
of its assets of any description whatsoever as security for a deposit of private funds,
or for the purpose of indemnifying any person, as surety for the financial institution,
or as surety for any other person. However, a Vermont financial institution or state
financial institution may so secure a deposit to the credit of the United States,
of the State of Vermont, or of any political subdivisions of the State, either directly
or indirectly. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14209. Examination of accounts
Each Vermont financial institution shall annually cause a sampling of its loans and
deposit accounts to be verified by the account holder. The verification shall be under
the direction of an outside auditor or the internal auditor of the Vermont financial
institution. The auditor shall report the results directly to the governing body.
The verification methodology and results shall be available to the Commissioner upon
request. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14210. Real estate trust and escrow
(a) In accordance with its schedule for similar remittances, any financial institution
in which a pooled real estate trust or escrow account has been established under 26 V.S.A. § 2214(c) shall remit the interest accumulated on the account to the Vermont Housing Finance
Agency established under 10 V.S.A. chapter 25 to be used in the Agency’s single family
home mortgage programs.
(b) A financial institution may deduct a reasonable remittance fee for transferring funds
to the Housing Finance Agency under this section. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14211. Claims not clearly consistent
If any claim not clearly consistent with the terms of any applicable authority on
file with a financial institution is made to any deposit, safe deposit box, property
held in safekeeping, security, obligation, or other property in the financial institution’s
possession or control, in whole or in part, by any person, including any depositor,
individual, or group of individuals, whether or not authorized to draw on or exercise
any right or control with respect to the property, the financial institution is not
required to recognize the claim without one of the following:
(1) a court order, issued by a court of competent jurisdiction and served on the financial
institution, enjoining or restraining the financial institution from taking any action
with respect to the property or instructing the financial institution to pay the balance
of the account, provide access to the safe deposit box, or deliver the property as
provided in the order; or
(2) a bond in the form and amount and with sureties satisfactory to the financial institution,
indemnifying the financial institution against any liabilities, loss, and expenses
it might incur because of its recognition of the claim or because of its refusal,
due to the claim, to honor or recognize any right with respect to the property. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14212. Joint fiduciary accounts
(a) Statement of purpose. The purpose of this section is to create a new form of joint
financial account for which the account owner designates a fiduciary with authority
to use monies in the account for the benefit and under the direction of the account
owner and to enable the account owner as well as law enforcement to enforce the terms
of the declaration of intent.
(b) A “joint fiduciary account” is created by a deposit in a financial institution in
the name of an owner naming a fiduciary or several fiduciaries when the owner has
received a disclosure statement and executed a declaration of intent as provided in
this section. An “owner” may be one or more joint owners of the account. Only the
owner may designate a fiduciary at the time an account is opened, or may substitute
or remove a fiduciary. A fiduciary shall act only in accordance with the declaration
of intent and shall have authority to take all actions permitted by the terms and
conditions of the account that are consistent with the declaration of intent.
(c) The declaration of intent shall include date of execution; name and signature of owner;
name and signature of fiduciary; any limitations on the power of the fiduciary to
distribute or expend the funds; whether the fiduciary is to be paid and, if so, how
much and on what basis; name and signature of two or more witnesses, neither of whom
shall, at the time of execution, be the fiduciary and who attest to the sound mind
and lack of duress on the owner; acknowledgment of receipt by the fiduciary of a copy
of the declaration; and notice to the fiduciary that a withdrawal or expenditure of
the funds in the joint fiduciary account that is not in accordance with the declaration
of intent may result in criminal or civil liability. The financial institution that
is to hold the joint fiduciary account shall provide its name and address and the
number of the account.
(d) A disclosure statement must accompany a declaration of intent. The disclosure statement
and declaration of intent shall be in not less than 10- point type and in substantially
the following form:
(1) Disclosure Statement:
INFORMATION CONCERNING JOINT FIDUCIARY ACCOUNTS
A joint fiduciary account allows you to give direction on how you would like your
money to be spent, at the same time as it allows you to give another person (or persons)
authority to withdraw money or write checks on your account. If you open a joint fiduciary
account, you are considered the “owner” of the account. The person or persons you
authorize to access the account are called a “fiduciary.” The fiduciary shall handle
your money in a way that is beneficial to you and to act according to your instructions.
You, as the owner, always have the right to withdraw money from or to write checks
on the account.
One way to understand the advantages of a joint fiduciary account is to compare it
to alternative forms of accounts. A regular joint account is an account in two or
more names. Both people have the same authority to take and use the money. Thus, even
if the money really belongs to one of the account holders, and the intent was that
it would be used for that person, nothing can be done to stop the other account holder
from taking and using all the money for other purposes.
A sole account with multiple authorized signatures provides a little more protection
than a regular joint account. At least it is clear with this account that the money
really belongs to the person whose name is on the account, and does not belong to
those who are only authorized to sign. (There are often tax reasons for a person to
have a sole account with multiple authorized signatures rather than a joint account.)
Nevertheless, nothing can be done to stop a person who is authorized to sign on the
account from taking and using all the money for some purpose other than for the person
whose money it is.
A joint fiduciary account provides more protection for the owner than either of the
other accounts because the owner makes a clear statement about how the money can be
used, and the fiduciary has to follow those instructions or be subject to civil or
criminal liability, or both. The fiduciary is also legally required to keep track
of how the money is spent so the owner or another authorized person can verify that
the money was used according to the instructions.
How do you want your money to be spent?
If you open a joint fiduciary account, you decide how you want your money to be spent.
This statement should be broad enough to include everything you need and want, but
not so broad as to go too far beyond that. Thus, you might want to instruct the fiduciary
to spend your money on “all my basic living expenses and, if any money is left over,
on gifts to my children and grandchildren, but not to exceed five percent of deposits
per year.” What is included in the instructions to the fiduciary is completely up
to you. If you want to pay your fiduciary for the services provided, or if you want
your fiduciary to be able to make gifts to himself or herself or others, you must
explicitly indicate that in your declaration of intent.
Do you want special instructions on accountings?
If you give no special instructions on accountings, the fiduciary must just keep track
of how the money is spent and provide that information to you, your legal representative,
a state agency or a court, but only if asked to do so. You might want to instruct
your fiduciary to give a periodic accounting to you or to someone else. Thus, your
instructions could include: “Give a copy of an accounting of your use of this account
to me and to my attorney [or my daughter] every January.”
If you want more than one fiduciary, what do you want their relationship to be?
For some account owners, it is useful to name more than one fiduciary. For example,
you might want your daughter to be the primary fiduciary, but your nephew to be the
fiduciary when she goes to Florida every winter. You can name more than one fiduciary,
but it is useful for you to give them instructions on when you want each to act. Those
instructions dictate how they should act. However, the financial institution holding
the account is under no obligation to make sure the fiduciaries act in accordance
with your instructions; it will still accept either signature as valid for taking
money out of the account.
Are you trying to make sure your fiduciary takes certain actions, or just trying to
give your fiduciary authority to act?
Sometimes an account owner wants to use the account to make sure the fiduciary takes
certain actions, such as paying the utility bills or paying the mortgage. The joint
fiduciary account cannot guarantee for you that the fiduciary will act as you hope.
The account simply authorizes the fiduciary to act, but does not oblige the fiduciary
to act. The same is true for a regular joint account, as well as a sole account with
multiple authorized signatures. For any of these accounts, if you want to make sure
certain bills are paid, you and your creditor may agree to have the creditor automatically
debit your account on a specific day of the month for the amount of your bill.
Have you already given or do you want to give someone authority to make decisions
for you beyond using the money in an account?
Creating a joint fiduciary account will only give the fiduciary authority to act on
your behalf with regard to the monies held in the account. It can be combined with
a power of attorney or a durable power of attorney (one that lasts even if you are
no longer able to make decisions for yourself). You can name the same person to be
your fiduciary on a joint fiduciary account and your agent under a power of attorney,
or you can name different people for each. In either event, it is useful to think
through who should be named in each document and the relationship between them if
you are going to name different people. If you have an attorney preparing a power
of attorney, consider consulting with the attorney when opening a joint fiduciary
account.
THE JOINT FIDUCIARY ACCOUNT WILL NOT BE VALID UNLESS A DECLARATION OF INTENT IS SIGNED
BY YOU IN THE PRESENCE OF TWO OR MORE WITNESSES WHO ARE NOT A NAMED FIDUCIARY, AND
IS ALSO SIGNED BY THE FIDUCIARY.
(2) Declaration of Intent:
DECLARATION OF INTENT FOR JOINT FIDUCIARY ACCOUNT
OWNER OF ACCOUNT
I/We ____________ , hereby open a Joint Fiduciary Account.
Following are my instructions to the fiduciary for how monies that are deposited
into this joint fiduciary account shall be used:
_________________________________________
_________________________________________
(Attach additional pages as necessary)
I/We hereby appoint __________ of __________ (town of residence) and ______ of ______ (town of residence) to be the fiduciary(ies) on the account, and acknowledge that
I/we have received a copy of “Information Concerning Joint Fiduciary Accounts”.
Dated at _______ , this ___ day of ____ , 20__ .
__________ Signature of Owner of Account
Dated at _______ , this ___ day of ____ , 20__ .
__________ Signature of Owner of Account
WITNESSES
I declare that the owner(s) appear(s) to be of sound mind and free from duress at
the time of signing this Declaration of Intent for a joint fiduciary account, and
that the owner(s) affirmed that he and/or she is (are) aware of the nature of the
document and is (are) signing it freely and voluntarily. I further declare that I
am not a person named as a fiduciary.
__________________
Witness Signature ________ Dated: ______
Witness Address ________
Witness (Print Name) _______
__________________
Witness Signature ________ Dated: ______
Witness Address ________
Witness (Print Name) _______
FIDUCIARIES (Only one is required.)
I declare that I am willing to act as the fiduciary on the Joint Fiduciary Account
of __________ (owner(s)). I have read the Declaration of Intent and agree to use the money in the
account only for the purposes stated in the Declaration. I further agree to maintain
accurate records of my use of any monies in the account and to produce them upon request
by the owner, by a legal representative of the owner, by a state agency, or by a court.
I understand that my authority to act ceases when an owner changes the fiduciary,
closes the account, or the last owner has died. I further acknowledge that I may be
sued civilly if I intentionally or negligently fail to abide by the terms of the Declaration
of Intent, or may be charged criminally if I intentionally fail to abide by its terms,
or both. I acknowledge that I have received a copy of the Declaration of Intent.
____________
Fiduciary (Print Name)
_________________________________________
Fiduciary Address
__________________ Date _________________________________________
Fiduciary Signature
If more than one:
____________
Fiduciary (Print Name)
_________________________________________
Fiduciary Address
__________________ Date _________________________________________
Fiduciary Signature
For Financial Institution Use Only:
Financial Institution Name: ____ Account Number: _________________________________________
Address: _________________________________________
(3) The Commissioner shall have the authority to adopt rules amending the disclosure statement
and declaration of intent to reflect changes necessitated by a change in law or to
make minor changes to the forms in this subsection.
(e) The fiduciary shall maintain accurate records to permit an accounting of the acts
of the fiduciary, and shall provide such records and accounting if requested to do
so by the owner, by a legal representative of the owner, by the Attorney General,
a State’s Attorney, or the Department of Disabilities, Aging, and Independent Living
if any has reason to believe the fiduciary is in violation of this section, or by
a court of competent jurisdiction.
(f) All rights, title, interest, and claim to a joint fiduciary account, and any additions
or accumulations to the account, shall be the property of the owner of the account.
An owner shall have authority to take all actions permitted by the terms and conditions
of the account. The designation of a fiduciary shall not affect the title to funds
in the account, and the owner shall not be considered to have made a gift to the fiduciary
of all or any portion of the funds in the joint fiduciary account, or to any additions
or accumulations to the account. The fiduciary shall have no right of survivorship
in the account unless such right is specifically provided for in the account title.
(g) The financial institution holding a joint fiduciary account shall retain a signed
copy of the declaration of intent according to the financial institution’s records
retention policy. Notwithstanding any provision of law to the contrary, no financial
institution shall be responsible for monitoring transactions to or from any joint
fiduciary account. A financial institution shall not be liable for withdrawals and
payments made by the fiduciary unless an owner has notified the financial institution,
in accordance with the terms and conditions of the account, to change the fiduciary,
or has closed the account, or the financial institution has been notified that the
last owner is deceased.
(h) Any owner who sustains damages or injury as a result of a fiduciary’s action or inaction
in violation of this section or the declaration of intent may sue the fiduciary for
appropriate equitable relief, and may sue and recover from the fiduciary the amount
of his or her damages, reasonable attorney’s fees, and exemplary damages not exceeding
three times the owner’s damages. Nothing in this section shall be construed to abrogate
any other causes of action or relief at law or equity to which the owner is entitled
under other laws or at common law.
(i) Whenever the Attorney General or a State’s Attorney has reason to believe that a fiduciary
has used or is about to use the proceeds in a joint fiduciary account in violation
of the declaration of intent, the Attorney General or a State’s Attorney may bring
an action in the name of the State against such person to restrain by temporary or
permanent injunction the use of funds from the account. The action may be brought
in the Superior Court of the county in which the joint fiduciary account is located,
where the owner resides, or where the fiduciary resides, has a place of business,
or is doing business. In addition to the foregoing, the Attorney General or a State’s
Attorney may request, and the Court is authorized to render, any other temporary or
permanent relief, or both, as may be in the public interest, including closing the
account, replacing the fiduciary, ordering restitution of cash to the account, imposing
of a civil penalty of not more than $10,000.00 for each violation, and ordering reimbursement
to the State of Vermont for the reasonable value of its services and expenses in investigating
and prosecuting the action. In addition to the foregoing, the Attorney General or
a State’s Attorney may seek relief under 33 V.S.A. chapter 69, subchapter 2 or may
charge the fiduciary pursuant to 13 V.SA. § 2028. (Added 2001, No. 115 (Adj. Sess.), § 1; amended 2005, No. 174 (Adj. Sess.), § 13; 2021, No. 105 (Adj. Sess.), § 296, eff. July 1, 2022.)
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Subchapter 003: LOANS
§ 14301. Loan authority
(a) General loan authority. Unless otherwise prohibited by State law, a Vermont financial institution may make,
sell, purchase, arrange, participate in, invest in, or otherwise deal in loans, derivative
transactions, or extensions of credit for any lawful purpose.
(b) Written loan policy.
(1) A financial institution’s governing body shall establish a written loan, credit, and
derivative transaction policy, as applicable to the activities of the financial institution,
which shall be reviewed and ratified at least annually, that addresses at a minimum,
the following:
(A) loan portfolio mix and diversification standards and, if applicable, derivative transaction
portfolio mix and diversification standards;
(B) prudent underwriting standards, including loan-to-value limits that are clear and
measurable;
(C) loan administration procedures, including delegation and individual lending officer
authority; and
(D) documentation and approval requirements to monitor compliance with lending policies.
(2) The policies adopted pursuant to this section shall be consistent with safe and sound
banking practices and appropriate to the size of the institution and nature and scope
of its operations.
(c) Interest on loans. Financial institutions may demand and receive interest and charges on their loans
in accordance with 9 V.S.A. chapter 4 or as otherwise provided by law.
(d) Limitations. A Vermont financial institution may not make loans, derivative transactions, or extensions
of credit outstanding at one time to a borrower in excess of 20 percent of its capital.
Total loans, derivative transactions, or other extensions of credit in excess of 10
percent of capital shall be approved by a majority of the governing body or the executive
committee of that institution or organization.
(1) Loans, derivative transactions, or extensions of credit to one person will be attributed
to another person and each person shall be deemed a borrower as follows:
(A) In the case of obligations of one person, the proceeds will be deemed to be used for
the direct benefit of another person and will be attributed to the other person when
the proceeds, or assets purchased with the proceeds, are transferred to another person,
other than a bona fide arm’s length transaction where the proceeds are used to acquire
property, goods, or services.
(B) In the case of obligations of a partnership or association, the obligations of each
general partner and of each member of the association.
(C) In the case of obligations of a general partner or a member of an association, the
obligations of the partnership or association.
(D) In the case of obligations of a corporation, the obligations of any subsidiaries in
which it holds, directly or indirectly, a controlling equity interest.
(E) In the case of obligations of a limited liability company, the obligations of any
subsidiaries in which it holds, directly or indirectly, a controlling equity interest.
(F) In the case of obligations of a corporation or limited liability company, the amount
of a loan made to any other person to the extent that the proceeds of the loan directly
or indirectly are to be:
(i) loaned to the corporation or limited liability company;
(ii) used for the acquisition from the corporation or limited liability company of any
equity interest in the corporation or company; and
(iii) transferred to the corporation or limited liability company without fair and adequate
consideration; provided, however, that the discharge of an equivalent amount of debt
previously incurred in good faith for value shall be deemed fair and adequate consideration.
(2) The following shall not be counted as indebtedness subject to the limitation of this
subsection:
(A) Indebtedness evidenced by bills of exchange or drafts drawn against existing values
and secured by a lien upon goods in transit with shipper’s order, bills of lading,
or comparable instruments attached.
(B) Indebtedness evidenced by notes or other paper secured by readily marketable corporate
stock having a fair market value of not less than 125 percent of the indebtedness.
(C) Indebtedness evidenced by notes or other paper secured by an assignment of accounts
receivable or of amounts due to become due on open account or on a contract to the
extent of not less than 125 percent of the indebtedness.
(D) Indebtedness evidenced by notes or other paper secured by liens upon agricultural
products, manufactured goods, or other chattels in storage in warehouses or elevators
with warehouse or elevator receipts attached, or goods released on trust receipts,
when the value of the security is not less than 125 percent of the indebtedness and
the financial institution’s interest is insured against loss by insurance policies
or certificates of insurance attached.
(E) Indebtedness arising out of the daily transaction of the business of any clearing
house association.
(F) Indebtedness secured to the extent thereof by the cash surrender value of life insurance
evidenced by policies of insurance validity issued and assigned.
(G) Indebtedness secured to the extent thereof by savings deposits or certificates of
deposit of solvent financial institutions up to the amount insured by the Federal
Deposit Insurance Corporation, and duly assigned.
(H) Any portion of any indebtedness that the U.S. government, or an agency or instrumentality
of the United States, unconditionally agreed to purchase or has unconditionally guaranteed
as to payment of both principal and interest, including loans insured or guaranteed
under the National Housing Act or the Servicemen’s Readjustment Act of 1944, as amended.
(I) Additional funds advanced for the benefit of a borrower by a financial institution
for payment of taxes, insurance, utilities, security, and maintenance and operating
expenses necessary to preserve the value of real property securing the loan.
(J) Amounts paid against uncollected funds in the normal process of collection.
(K) That portion of a loan or extension of credit sold as a participation by a financial
institution on a nonrecourse basis, provided that the participation results in a pro
rata sharing of credit risk proportionate to the respective interests of the originating
and participating lenders. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2011, No. 78 (Adj. Sess.), § 26, eff. April 2, 2012; 2021, No. 105 (Adj. Sess.), § 297, eff. July 1, 2022.)
§ 14302. Real estate loans
(a) Clear title. All loans secured by mortgages on real estate shall be supported by written evidence
satisfactory to the financial institution that title to the security is marketable
and the lien is valid and enforceable. A mortgage on lands subject to lease under
which rents are reserved to the owner, with all of the owner’s rights and options
under the lease collaterally assigned to the financial institution as security or
a mortgage upon lands impressed with a public use, sometimes known as lease, society,
or glebe lands, but held under a durable lease, shall not be deemed to be subordinate
to such lease or public use.
(b) Appraised value. The appraisal of real estate securing a federally related transaction entered into
by a financial institution shall comply with the regulations of the Federal Deposit
Insurance Corporation, as amended and codified at 12 C.F.R. Part 323. The appraisal of real estate securing a nonfederally related transaction entered
into by a financial institution shall comply with the federal supervisory agencies’
interagency guidelines, as amended.
(c) Servicing of loans. A financial institution may contract with another financial institution, corporation,
or association whose transactions are in whole or in part the handling and servicing
of mortgage loans, to handle and service loans in its behalf. Whenever such a contract
is made, the financial institution shall not lose or suffer any impairment of any
right of deduction or offset it might have against any one liable for the mortgage
debt.
(d) Home loan escrow accounts. Any financial institution that requires a home loan escrow account to be established
and maintained by a borrower shall follow the provisions of section 10404 of this title.
(e) Loans insured or guaranteed by federal law. Any mortgage on real estate given to secure a loan insured or guaranteed by the federal
housing commissioner, the administrator of Veterans Affair’s or the administrator
of the Small Business Administration, under the National Housing Act, the Servicemen’s
Readjustment Act of 1944 or the Small Business Act, respectively, as amended, shall
not be subject to the provisions of any law of this State prescribing the nature,
amount, or form of security, or manner of repayment, or requiring security upon which
loans or advances of credit may be made, or prescribing or limiting the period or
principal amount of which loans may be made, or prescribing or limiting the interest
that may be charged or other charges that may be made or taken upon any loan or advance
of credit. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14303. Bank credit cards
(a) General authority. Any financial institution that is authorized to do a lending business in this State
may issue bank credit cards.
(b) No discrimination. No financial institution shall discriminate against any applicant for a bank credit
card on the bases set forth in section 10403 of this title. Nothing in this section shall be taken to prohibit the establishment of separate
credit card accounts for persons who are married.
(c) Statements of account. Issuers of bank credit cards shall promptly furnish a statement of each cardholder’s
account as of the end of each monthly period, which need not be a calendar month,
in which there is any unpaid balance on the account, which statement shall include
the following information, not necessarily in the order stated:
(1) the unpaid balance of the account at the beginning of the period;
(2) the amount of cash advances, if any, during the period;
(3) unless furnished by the seller or tax department to the cardholder by sales slip,
memorandum, or otherwise, information in the statement of account sufficient to allow
the cardholder reasonably to identify the transaction or delinquent taxes paid as
permitted by 32 V.S.A. § 3109(c) during the period, the cash price and the date of each purchase or tax payment;
(4) the payments and other credits applied to the cardholder’s account during the period;
(5) the balance at the billing date for cash advances, property, and services subject
to finance charge;
(6) the amount and rate of the finance charge imposed;
(7) the balance at the billing date for property, labor, or services purchased or delinquent
taxes paid during the billing period, if any, and the date by which it may be paid
to avoid any finance charge.
(d) Finance charges; annual fees; ATM fee.
(1) As to that part of an account balance that shall result from cash advances, if any,
the finance charge shall be applied to the average daily balance of the cash advances
in the account for the billing period. An issuer of a bank credit card account may
provide for an annual fee. Except for cash advances, no finance charge shall be imposed
on items in the account for property, labor, and services purchased during the billing
period to the extent that they are paid for not later than 25 days from the financial
institution’s billing date for the item. No change in the terms of a bank credit card
agreement that might require such credit cardholder to pay an annual fee shall take
effect unless:
(A) at least 60 days prior to the effective date of the change, a written notice has been
mailed or delivered to the cardholder that clearly and conspicuously describes the
annual fee, and contains a return stamped response addressed to the issuer with instructions
to the cardholder to return the response to the issuer within 30 days, signed by the
cardholder and indicating a preference, expressed in the response, for either of the
following options:
I accept the change as notified.
I do not accept, and hereby cancel my card.
The notice shall further state that the incurrence by the cardholder or another authorized
person of any further indebtedness under the plan to which the agreement relates on
or after the effective date of such change specified in the notice shall constitute
acceptance of such annual fee; and
(B) either the credit cardholder agrees in writing to such annual fee or the credit cardholder
or another authorized person incurs such further indebtedness on or after the effective
date of the change stated in such notice.
(2) A credit transaction effected by the use of an automated teller machine (ATM) may
be subject to a transaction fee in addition to any finance charges permitted by this
section.
(e) Payments.
(1) 9 V.S.A. §§ 45 and 47 shall apply with respect to prepayment and application of payments to cardholder
accounts. With respect to transactions in Vermont charged to a bank credit card account
established by a Vermont financial institution, the defenses preserved by 9 V.S.A. § 2455 shall be available to the cardholder as against the financial institution in any
action or proceeding to enforce collection of said account by a financial institution.
(2) In the case of a bank credit card account, except for a loan or extension of credit
secured by a lien against real estate, the periodic billing shall be no less than
1/48th of the balance as of the last advance.
(f) Quarterly reports. Any financial institution that is authorized to do business in this State may issue
bank credit cards only if it reports quarterly to the Commissioner pursuant to subsection 10401(b) of this title on its rates and charges on its bank credit card products. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 298, eff. July 1, 2022.)
§ 14304. Card holder represented by legal counsel
(a) A credit card company or its creditor or collection agency shall not contact a card
holder regarding a debt, late fee, or other charge once informed that the card holder
is disputing the debt, late fee, or other charge; is represented by legal counsel
in the dispute; and the card holder has provided the credit card company or its creditor
or collection agency with the name, address, and telephone number of the legal counsel.
(b) A credit card company or its creditor or collection agency that violates subsection
(a) of this section shall be fined not more than $10,000.00.
(c) Each violation of subsection (a) of this section shall be considered a separate offense. (Added 2009, No. 55, § 11.)
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Subchapter 004: TRUST POWERS
§ 14401. Types of trust functions
(a) With the prior approval of its governing board, a financial institution may act alone
or with others as:
(1) fiduciary;
(2) custodian of property;
(3) agent or attorney in fact;
(4) registrar or transfer agent of securities;
(5) trustees under corporate mortgages, trust deeds or similar indentures; or
(6) fiscal agent of the United States, a political subdivision thereof, a body politic,
a corporation, or an individual.
(b) With that approval, a financial institution may also be appointed and act as executor
or coexecutor of a will, codicil, or writing testamentary, as administrator or co-administrator
with the will annexed, as administrator or co-administrator of a person deceased,
as receiver, assignee, trustee, alone or with others, or as guardian or co-guardian
of a person subject to guardianship, and with that approval may relinquish the fiduciary
office, under the same circumstances, in the same manner and subject to the same control
by a court having jurisdiction, as a natural person legally qualified. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14402. National financial institutions; state financial institutions
(a) To the same extent that the laws of the United States permit, a national financial
institution located and doing business in this State may act, alone or with others,
as specified in section 14401 this title.
(b) Subject to the provisions of 11A V.S.A. chapter 15 and 11 V.S.A. chapter 21, subchapter 10, except that 11A V.S.A. § 15.06 and 11 V.S.A. § 3136 shall not apply to any financial institution, including a state trust company, a
financial institution with trust powers with its principal place of business not in
Vermont may act, alone or with others, as specified in section 14401 of this title, and may establish one or more places of business in this State for the conduct of
such trust business, provided that:
(1) it is a direct or indirect subsidiary of a bank holding company that has a direct
or indirect financial institution subsidiary that has an office in this State at which
deposits are accepted; or
(2) the law of the state in which it is located or domiciled would allow either a Vermont
financial institution or a national financial institution, with its principal place
of business located in Vermont to establish one or more places of business in such
state for the conduct of trust activities if authorized by its supervisory agency
to exercise trust powers.
(c) As a condition precedent to its right to act in the capacities specified in this section,
it shall file a stipulation with the Commissioner of Taxes, in which it shall agree
that any funds, securities, or property held by it under any appointment under this
subchapter, shall be taxed in the same manner and to the same extent as funds of the
same character held by a Vermont financial institution.
(d) A state financial institution with trust powers, including a state trust company,
shall obtain the Commissioner’s written approval before establishing a place of business
in this State pursuant to subsection 11701(b) of this title. Before issuing such approval, the Commissioner must find that it is adequately staffed,
equipped, and able to furnish trust services in this State. The Commissioner may examine
its activities in this State at any time deemed necessary to ensure its continued
safety and soundness, ability to furnish trust services, and compliance with the laws
of this State. It shall make its books and records pertaining to its business in this
State available to the Commissioner for such examination. Each state financial institution
shall pay fees and assessments as prescribed by sections 18, 19, and 11501 of this title. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14403. Approval of Commissioner
No financial institution not otherwise expressly authorized by its respective supervisory
agency under state or federal law may exercise the powers provided in this subchapter
until it has applied for and obtained approval of the Commissioner to do so under
subsection 11701(b) of this title. The Commissioner shall conduct inquiry into the affairs of the financial institution
applying for those powers to determine if the financial institution is staffed, equipped,
and able to furnish those services. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2005, No. 36, § 5, eff. June 1, 2005.)
§ 14404. Security
The capital of a financial institution exercising trust powers shall be held as security
for the faithful discharge of the duties undertaken thereby as well as for the claims
of other creditors. The financial institution shall furnish to the authority making
the appointment a good and sufficient bond for a sum not less than 25 percent of the
amount of the trust fund, conditioned for the faithful discharge of the duties undertaken
by virtue of section 14401 of this title. However, when the bond would not exceed $2,000.00, a financial institution shall
be relieved of furnishing it. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14405. Powers and duties of officers
In proceedings in the Probate Division of the Superior Court or elsewhere, connected
with authority exercised as executor, administrator, receiver, assignee, trustee,
or guardian, all accounts, returns, and other papers may be signed and sworn to in
behalf of such a financial institution exercising trust powers by any officer thereof
duly authorized by it. The answers and examinations of that officer, under oath, shall
be received as the answers and examinations of the financial institution. The court
may order and compel any and all officers of the financial institution to answer and
attend the examinations, in the same manner as if they, personally, were parties to
the proceeding or inquiry. Such a financial institution shall not be required to receive
or hold any property or money or to execute any trust contrary to its own desire. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2009, No. 154 (Adj. Sess.), § 238a, eff. Feb. 1, 2011.)
§ 14406. Segregation of trust funds; exception
All monies, property, or securities received or held by a financial institution in
the capacity of executor, administrator, receiver, assignee, trustee, or guardian
shall be kept separate and distinct from its general business and shall not be mingled
with the investments of its assets or be liable for its debts or obligations. However,
a financial institution exercising trust powers, in good faith, may deposit temporarily
in its commercial or savings departments any money so held in trust awaiting distribution
or investment and may also deposit in its savings department as an investment for
any one trust an amount insurable and insured by the Federal Deposit Insurance Corporation.
All such deposits in either department shall be in the name of the trust or in the
name of the financial institution as trustee of the trust. If the security afforded
by virtue of this section and section 14404 of this title is insufficient to satisfy in full any claim growing out of the holding or management
of monies, property, and securities so received and held, the unsatisfied balance
shall then be satisfied as are demands of the general creditors of the financial institution. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14407. Collective investment funds
(a) A Vermont financial institution may invest assets that it holds as a fiduciary in
the following collective investment funds:
(1) a fund maintained by the financial institution, or by one or more affiliated financial
institutions, exclusively for the collective investment and reinvestment of money
contributed to the fund by the financial institution, or by one or more affiliated
financial institutions, in its capacity as trustee, executor, administrator, guardian,
or custodian under the Uniform Transfers to Minors Act;
(2) a fund consisting solely of assets of retirement, pension, profit sharing, stock bonus,
or other trusts that are exempt from federal income taxation under the Internal Revenue
Code; and
(3) a fund consisting of any other assets held as a fiduciary, to the extent not prohibited
by applicable law.
(b) In addition to any other rules that the Commissioner finds necessary or desirable
for the administration of this section, the Commissioner may adopt rules on the following:
(1) the requirements for a written plan for the establishment, maintenance, and operation
of collective investment funds;
(2) the method and frequency of valuation of such fund’s assets;
(3) the admission and withdrawal of accounts;
(4) standards on self-dealing and conflicts of interest;
(5) permissible management fees;
(6) the requirements for audits and financial reports of collective investment funds;
and
(7) the requirements for the establishment, maintenance, and operation of other investments
permitted by subdivision (a)(3) of this section, including the treatment of exemptions
from the provisions of this section.
(c) A Vermont financial institution administering a collective investment fund shall have
exclusive management thereof, except as a prudent person might delegate responsibilities
to others.
(d) Each participating account in a collective investment fund shall have a proportionate
interest in all the fund’s assets.
(e) A Vermont financial institution administering a collective investment fund may charge
reasonable expenses incurred in operating the fund, but not expenses associated with
establishing or reorganizing a collective investment fund.
(f) A Vermont financial institution may not advertise any collective investment fund except
in connection with the advertisement of the general fiduciary services of the institution.
(g) A Vermont financial institution shall not issue any certificate representing an interest
in a collective investment fund, except to provide a withdrawing account with an interest
in a segregated investment. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2015, No. 23, § 87.)
§ 14408. Registration and sale of securities
A Vermont or state financial institution owning or holding stocks or other securities
in any fiduciary capacity may cause the same to be registered in the name of a nominee.
The word “nominee” shall be construed to include one or more natural persons, a partnership,
a corporation, or similar entity. Any such securities jointly held in a fiduciary
capacity by a financial institution and another, individual or corporate, may be registered
in the name of a nominee mutually satisfactory to the co-fiduciaries. Any fiduciary
acting jointly with a financial institution may authorize and direct the financial
institution in writing to register securities provided in this section. An individual
or corporate fiduciary may deliver any such securities to a financial institution
as custodian and may authorize and direct the financial institution in writing to
register such securities in the name of a nominee. A financial institution having
caused securities to be registered in the name of a nominee as provided in this section
and wishing or being required by the terms of its fiduciary agreement to deliver them
to one legally entitled thereto shall first cause them to be transferred into the
name of the one to receive delivery. Sales of any such securities made by a financial
institution under its fiduciary authority may be completed by delivery of the security,
endorsed by the nominee without the necessity of transfer through a joint fiduciary,
the trust-creator, or the beneficiary. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001; amended 2021, No. 105 (Adj. Sess.), § 299, eff. July 1, 2022.)
§ 14409. Disposition of securities upon court order; liability for acts of nominee
Any fiduciary financial institution may dispose of any security under an order or
decree of any court of competent jurisdiction by delivery of the security endorsed
by the nominee as provided in section 14408 of this title in the case of sales. Any fiduciary financial institution shall be absolutely liable
for any loss occasioned by the acts of the nominee or the financial institution with
respect to any securities registered in the nominee’s name. Both legal and equitable
ownership of all securities in the financial nominee’s possession or subject to the
financial nominee’s control shall be fully revealed by the financial institution’s
records. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)
§ 14410. Fiduciary investments
(a) In the absence of an express prohibition in the instrument, judgment, decree, power,
order, or other writing creating a trust or other fiduciary relationship, a financial
institution acting as fiduciary may invest and reinvest funds held by it in a fiduciary
capacity in the securities of an open-end or closed-end investment company or investment
trust registered under 15 U.S.C. § 80a-1 to 80a-64 (Investment Company Act of 1940), as that act exists now or as amended in the future.
(b) The investments authorized in subsection (a) of this section may be made even if the
financial institution, or an affiliate thereof, is providing services to the investment
company and is receiving reasonable compensation for such services as an advisor,
manager, sponsor, administrator, broker, distributor, custodian, shareholder servicing
agent, transfer agent, registrar, or any related services. At least annually, the
financial institution shall disclose in a clear and conspicuous manner to the principal
of each fiduciary account the fees it has charged or received from the investment
company, or an affiliate thereof, for such services and the basis upon which compensation
is calculated, expressed either in a specific amount or as a percentage of asset value. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001.)