State of Illinois
92nd General Assembly

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 1        AN ACT concerning corporate fiduciaries.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5.   The  Corporate  Fiduciary Act is amended by
 5    changing Section 2-8 as follows:

 6        (205 ILCS 620/2-8) (from Ch. 17, par. 1552-8)
 7        Sec. 2-8.  Collateralization of Collateralizing fiduciary
 8    assets.
 9        (a)  A corporate fiduciary  shall  not  be  required  and
10    shall not have the power to collateralize or secure fiduciary
11    funds except as provided in this Section.
12        (b)  All funds, both principal and income, deposited with
13    or  held  in  a fiduciary capacity by any corporate fiduciary
14    awaiting  investment  or  distribution,  and  not   otherwise
15    subject  to direction regarding investment or non-investment,
16    shall to the extent reasonable under existing  circumstances,
17    be  prudently  invested  for  the  beneficiaries at a rate of
18    return commensurate with  that  available  on  trust  quality
19    investments.
20        (c)  Funds, both principal and income awaiting investment
21    or  distribution,  may  be  deposited  in deposit accounts or
22    other investment vehicles of the corporate fiduciary,  or  of
23    any  affiliate  of  the  corporate fiduciary; and funds, both
24    principal and  income  awaiting  investment  or  distribution
25    which  need  not  be invested hereunder for the beneficiaries
26    may be commingled with the corporate  fiduciary's  own  funds
27    and  used  by  the  corporate fiduciary in the conduct of its
28    business, provided that in either case the following apply:
29             (1)  The corporate fiduciary or, in the case of  the
30        deposit  in  an affiliate, such affiliate shall set aside
31        in the corporate fiduciary or affiliate, as the case  may
                            -2-                LRB9201502JSpr
 1        be,  as  collateral,  securities  of the classes in which
 2        corporate fiduciaries  are  authorized  to  invest  trust
 3        funds under  the laws of the State of Illinois.
 4             (2)  The  market  value of the collateral may not be
 5        less than 100% of the amount commingled or deposited.
 6             (3)  No collateral shall be required  or  authorized
 7        if  the  deposit  is  made  solely  at  the direction and
 8        determination  of  the  settlor,  beneficiary  or   other
 9        person,  other  than  the corporate fiduciary, having the
10        right to direct investment of funds.
11             (4)  No collateral shall be required  or  authorized
12        with respect to any part of such deposit which is insured
13        by the Federal Deposit Insurance Corporation.
14        (d)  Funds shall not be held commingled and uninvested or
15    undistributed  for  an  account any longer than is reasonable
16    under existing circumstances for the proper management of the
17    account.
18        (e)  The collateralization required in  this  Section  is
19    not  required  or  authorized  if  the corporate fiduciary or
20    affiliate has in force a surety bond meeting the requirements
21    of  this  Section  if  it  is  in  a  form  approved  by  the
22    Commissioner and if it indemnifies the owners,  settlors,  or
23    beneficiaries  of  funds held in a fiduciary capacity against
24    loss due  to  the  failure  of  the  corporate  fiduciary  or
25    affiliate  and  is  issued  by  a  licensed insurance company
26    authorized to transact business in the State  that  has  been
27    approved  by  the  Commissioner  for  the  purpose of issuing
28    surety bonds under this Section.  A  corporate  fiduciary  or
29    affiliate  may  also satisfy the requirements of this Section
30    by a combination of a surety bond  and  collateralization  as
31    provided in this Section.
32        (f)  In  the  event  of  the  failure  of  the  corporate
33    fiduciary  or  affiliate in which the corporate fiduciary has
34    made a  deposit  or  commingled  funds,  the  owners  of  the
                            -3-                LRB9201502JSpr
 1    fiduciary  funds  shall  have  a first lien, to the extent of
 2    their interest in such funds, on the cash and securities used
 3    as collateral hereunder or the surety  bond  in  addition  to
 4    their claim against the estate of the corporate fiduciary.
 5    (Source: P.A. 88-636, eff. 9-9-94; P.A. 88-662, eff. 9-16-94;
 6    89-364, eff. 8-18-95.)

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