SECTION 660.37. Security for deposit of fiduciary funds.

• (1) If security, including insurance by the Federal Deposit Insurance Corporation, is furnished as provided in subsection (2), funds held in a fiduciary account by a trust company or a trust department awaiting investment, distribution, or payment of debts, taxes, or expenses may, unless prohibited by the governing instrument or by court order, be deposited in demand or time accounts of a bank or association. Unless otherwise expressly directed by the governing instrument or in writing by a beneficiary, a fiduciary shall not be required to invest current income accruing to a fiduciary account if, within 90 days after receipt thereof, such income is to be distributed or will be used for payment of debts, taxes, or expenses. In addition, in any case of a demonstrated need of or benefit to a fiduciary account or beneficiaries thereof, or when the investment or administration circumstances of a fiduciary account or beneficiaries thereof cause it to appear prudent or otherwise appropriate, a trust company or trust department may invest funds held by it in a fiduciary account in time deposits in, or issued by, a bank or association, of such type or maturity as appears appropriate at the time of the investment, including maturities in excess of 1 year; and in the case of a trust department, any such deposits may be made in the commercial department of the fiduciary bank or the nontrust departments of the fiduciary association. Funds so deposited and secured may be used by the depositary bank or association in the conduct of its business, and it shall pay interest on any such time deposits at a rate not less than the standard interest rate it pays on time deposits of the same type and having substantially the same characteristics, including size and maturity. If the depositary bank or association pays interest on such deposits at a rate equal to or in excess of such standard rates, it shall not be subject to any claim for an amount of interest or for potential earnings in excess of the interest so paid but is subject, however, in the case of the depositary trust company or trust department, to the provisions of s. 518.11. In this section, the term “depositing trust company or trust department” means the trust company or the trust department depositing funds of a fiduciary account, and “depositary bank or association” means the bank or association, including the fiduciary bank or association, in which such funds are deposited.
  (2)(a) Except as provided by paragraph (b), a trust company or trust department shall not deposit any funds of a fiduciary account in any bank or association in an amount in excess of the insurance provided by the Federal Deposit Insurance Corporation unless the depositary bank or association shall first set aside under the control of the depositing trust company or trust department, as collateral security for the pro rata benefit of each fiduciary account whose funds are so deposited, readily marketable securities which are eligible under the laws of this state for investment by banks, associations, or fiduciaries, having a market value not less than the amount of the funds so deposited which exceeds the insurance provided by the Federal Deposit Insurance Corporation. Substitutions and withdrawals of such securities may be made from time to time, but the aggregate amount of the market value of the securities so set aside shall at all times be at least equal to the amount herein required, and it shall not be necessary that the securities so set aside be segregated as to the funds of each separate fiduciary account which are so deposited. Specifically identified securities effectively pledged for the purposes required herein, including those held under a safekeeping receipt as permitted by law, shall be deemed to be set aside under the control of the depositing trust company or trust department whether or not in its actual physical possession.

  (b) This subsection does not apply to fiduciary accounts in which, pursuant to the terms of the governing instrument, full investment authority is retained by the grantor or is vested in persons or entities other than the bank, association, or trust company and the bank, association, or trust company as fiduciary does not have power to exert any influence over investment decisions.
  (3) Until all funds of fiduciary accounts deposited by a depositing trust company or trust department have been withdrawn from the depositary bank or association, no other creditor or stockholder of the depositary bank or association shall have any claim or right to the securities so set aside as collateral; and in the event of the failure of the depositary bank or association, the depositing trust company or trust department, and the fiduciary accounts the funds of which were so deposited, shall have a first and paramount lien on the securities so set apart as collateral, in addition to their claim against the estate of the depositary bank or association.

History.-s. 3, ch. 28016, 1953; s. 1, ch. 29871, 1955; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 135, 151, 152, ch. 80-260; ss. 2, 3, ch. 81-318; s. 1, ch. 91-307; ss. 1, 145, ch. 92-303.

Note

Note.-Former ss. 660.04, 660.05.

History.-s. 3, ch. 28016, 1953; s. 1, ch. 29871, 1955; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 135, 151, 152, ch. 80-260; ss. 2, 3, ch. 81-318; s. 1, ch. 91-307; ss. 1, 145, ch. 92-303.

Note

Note.-Former ss. 660.04, 660.05.