banking authorities, as security for court and private trusts generally, is not a compliance with the requirement quoted above. REVIEW QUESTIONS 1. What is the meaning of the word "fiduciary"? What are the usual fiduciary relations? 2. What are the qualifications of an executor? Why is it difficult to select an individual executor? 3. Who may act in a fiduciary capacity? What institutions may act as trustees? 4. How long have trust companies had such power? Why have state banks been authorized to exercise trust powers? 5. When were national banks authorized to act as trustees? Under what circumstances are they permitted to act? 6. What did the courts decide as to the exercise of trust powers by national banks? 7. Are state laws regulating corporate trustees binding on national banks? What minimum paid-in capital is required for trust companies in your state? How are the beneficiaries of trust funds protected in your state? rule as to state May trust funds rule as to this? 8. How are trust funds segregated? What is the II. How must trust funds be invested? Who decides on investments 12. What are the general rules as to banks appointed to execute trusts under an order of court? 13. When may trust funds be deposited in the commercial department as other funds are deposited? Does the general deposit prescribed by statute cover such deposits? CHAPTER LVII ADVANTAGES OFFERED BY CORPORATE § 481. Difficulty of Selecting a Suitable Executor The advent of the bank in a fiduciary capacity is comparatively recent. Even the trust company acting as fiduciary gives a service with which the public at large is more or less unfamiliar. It is the purpose of this chapter to point out some of the many advantages of a bank or a trust company as a fiduciary over the individual. When a person prepares to execute his last will and testament, one of the first difficulties to confront him is the selection. of an executor and trustee. He must select someone who will in all probability survive him. He hopes that the person will live to administer the estate and to execute the trusts created by the will. The uncertainty of human life is such that no matter what care is used in making the selection, the person chosen may die before the testator or before completing his executorship, or if more than one is appointed, all may die or otherwise become incapacitated and therefore unable to execute the trust. § 482. Why a Bank or a Trust Company Is to Be Preferred If a bank or a trust company is designated, all this difficulty is avoided. The life of the corporate executor or trustee is perpetual. In the nature of things it cannot become ill or incapacitated. By the terms of a certain will, trusts were set up, and three persons designated as executors and trustees. Two of them were friends of the testator and the third was the testator's wife. The testator died and all three executors duly qualified. Before the trusts terminated, one of the friends resigned; then one died. The widow continued to act for a number of years and then she died. Her oldest son made application for appointment. He was then a middle-aged man of robust health. However, on the very day he was appointed word was received by his attorney that he had died the previous day. Then followed further difficulties, and unpleasant litigation was avoided only by a compromise arrangement which provided for the appointment of two trustees, neither of whom had had any previous experience and one of whom was unqualified for the duties of trustee by human frailties. Neither of them would ever have been selected by the testator. Had he in the first place designated a bank or a trust company as his executor and trustee, none of these difficulties could ever have arisen. The corporate fiduciary, whether a bank or a trust company, never becomes ill. It never goes on a vacation or a business trip. It is always at its place of business, ready to attend to the affairs of the estate entrusted to its care. How often does it happen in the case of an individual executor or trustee that, at the very time it is necessary to see him about some business of the estate, he is away, or is unable to attend to it, no matter how vitally important it may be, because he has been ill or has been called away on his own affairs? § 483. The Accessibility of a Corporate Fiduciary An important consideration in the selection of a fiduciary is accessibility. A bank or a trust company is always accessible. Its office is centrally and, to all intents and purposes, permanently located. An individual frequently moves his office or his residence. Both office and residence may be and often are out of the way. People who have business to transact with the estate may not find it easy to locate the individual executor's place of business. Practically everyone knows the location of the bank or the trust company. Also everyone is familiar with the regular business hours of the bank or the trust company, whereas the business hours of individuals vary with the nature of their businesses. § 484. Competency of Corporate Fiduciaries Acting in a fiduciary capacity is a business in and of itself. It requires a great deal of study and experience. How many individuals have ever studied the duties of a fiduciary? How many have had any experience in a position of this kind? To be sure, a few individuals have acted in some one of these capacities once or twice before, but how far that is from making them expert! Is it reasonable to expect an inexperienced person, even though well educated and intelligent, to transact an important piece of business with very little or no previous preparation, and about which he has hitherto known almost nothing? Then how evident it is that a testator should not appoint an executor or a trustee who has no training or experience in that capacity. A man should always realize that the work of his lifetime, namely, the building up of sufficient means to provide for his family after he has gone, may be defeated by the acts of an inexperienced fiduciary. Remember that in such case there is no indemnity to be obtained because executors often do not have to file bonds, and even when required to do so the bond can be relied on only for infidelity, that is, to make good positive dishonesty. On the other hand, a bank or a trust company is thoroughly experienced in all these fiduciary capacities and may be said to be fairly expert. The men in charge of the work are handling the business of the fiduciary every business day of the year. They are selected by the bank or the trust company because of their knowledge and previous training. So many and such a variety of cases have passed through their hands, many of them extremely complicated, that whatever the situation that confronts them, it will be handled in the manner bringing the best results to the estate and therefore to the beneficiaries. § 485. The Manifold Duties of an Executor When a person of large or comparatively large means dies, the administration of his estate necessarily involves a great deal of detail work. It takes much time for the executor to work out these details, as anyone at all familiar with administration matters must realize. Some of these matters have already been given in the earlier chapters of this work, but for the sake of emphasis we shall repeat some that have to receive attention. The personal representative (executor or administrator), having qualified, must then collect all the assets of the estate. These may, of course, be in many different forms and in many different places. Usually, one finds several savings bank accounts, a number of investments in stocks and bonds of corporations, very likely a number of bonds and mortgages on real property, and frequently an interest in a going business. The personal representative must also prepare to pay all the debts of the decedent. Whether or not he is required to advertise for claims against the decedent, it is better practice to do so both as a matter of protection to himself and because by so doing he can settle the estate within a shorter period -in New York within six months-than he could if he did not advertise. He must also receive and record all claims against the estate. Properly none of these, except possibly the undertaker's bill, should be paid until all of the known claims have been filed and the time of filing has expired, so that there can |