CHAPTER 33. Administrative Provisions

§ 3301 Application of chapter; definitions [For application of this section, see 79 Del. Laws, c. 172, § 6]. (a) This chapter shall govern fiduciaries, as well as agents in certain instances, now or hereafter acting under governing instruments. Except as otherwise specified within the definitions of this section, the definitions of this section shall apply to this chapter, as well as to Chapters 35, 39, and 45 of this title, as well as to any other laws of this State incorporating by reference either this section or the laws of trusts generally. (b) The term “agents” shall mean custodians (other than those acting under the Uniform Transfers to Minors Act, Chapter 45 of this title), escrow agents, managing agents, all persons defined as agents by the general law of agency and persons holding, other than in the capacity of a fiduciary as defined in this section, property belonging to another person whether that other person is a fiduciary or a nonfiduciary. (c) The term “clearing corporation” shall refer to a “clearing corporation” as defined in § 8-102 of Title 6. (d) The term “fiduciary” shall mean trustees, personal representatives, guardians, custodians under the Uniform Transfers to Minors Act (Chapter 45 of this title), advisers or protectors acting in a fiduciary capacity under § 3313(a) of this title, agents acting in a fiduciary capacity under § 3322 of this title, designated representatives acting in a fiduciary capacity under § 3339 of this title, enforcers acting in a fiduciary capacity under § 3556(3) of this title, and other fiduciaries; while the term “nonfiduciary” shall mean advisers or protectors not acting in a fiduciary capacity under § 3313(a) of this title, agents not acting in a fiduciary capacity under § 3322 of this title, designated representatives not acting in a fiduciary capacity under § 3339 of this title, enforcers not acting in a fiduciary capacity under § 3556(3) of this title, and others that are not acting in a fiduciary capacity. (e) The term “governing instrument” shall mean a will, trust agreement or declaration, court order, or other instrument that creates or defines the duties and powers of a fiduciary, and shall include any instrument that modifies a governing instrument, allocates trustee powers, duties, and responsibilities among cotrustees under § 3343 of this title, or, in effect, alters the duties and powers of a fiduciary or other terms of a governing instrument. (f) The terms “legal investment” or “authorized investment” or words of similar import, as used in any governing instrument, shall mean any investment which is permitted by the terms of § 3302 of this title. (g) The term “letter of wishes” shall mean any separate writing created by a trustor that makes specific reference to a governing instrument of a trustor and contains statements regarding the trustor’s intent regarding the governing instrument, but is not itself a governing instrument. (h) The term “wilful misconduct” shall mean intentional wrongdoing, not mere negligence, gross negligence or recklessness and “wrongdoing” means malicious conduct or conduct designed to defraud or seek an unconscionable advantage. (i) For purposes of construing a governing instrument, unless a contrary statement appears in such governing instrument: (1) The terms “child” and “parent” shall be as defined in § 101 of this title. (2) The term “fiduciary fund” means the trust, estate, guardianship account, or account established under a Uniform Transfers to Minors Act [Chapter 45 of this title] that is being administered by a fiduciary. (3) The term “interested person” means any living person who: a. Is an income beneficiary or remainder beneficiary of a trust; b. Has a vested interest in a decedent’s estate; c. Receives benefits as a ward from a guardianship account; or d. Is the minor with respect to an account established under a Uniform Transfers to Minors Act [Chapter 45 of this title]. (4) The term “issue” shall be as defined in § 101 of this title, and shall denote a distribution per stirpes, such that the children of the person whose issue is referred to shall be taken to be the heads of the respective stocks of issue and a person legally adopted, whether under or over the age of 18 years at adoption, shall thereafter be considered to be a child and issue of the adopting person and an issue of the ascendants of the adopting person, and the issue of the person so adopted shall be considered to be issue of the adopting person and the adopting person’s ascendants. (5) The term “published fee schedule” and other terms of similar import mean the schedule or formula described in § 3561(b)(1) of this title in the case of any trustee required to file such a schedule or formula under that section. (6) The term “wilful misconduct” means intentional wrongdoing, not mere negligence, gross negligence, or recklessness and “wrongdoing” means malicious conduct or conduct designed to defraud or seek an unconscionable advantage. 25 Del. Laws, c. 226, §  3 ; Code 1915, §  3875; 37 Del. Laws, c. 259, §  1 ; 40 Del. Laws, c. 230, §  1 ; Code 1935, §  4401; 43 Del. Laws, c. 224, §  1 ; 44 Del. Laws, c. 171, §  1 ; 12 Del. C. 1953, §  3301; 59 Del. Laws, c. 271, §  2 ; 76 Del. Laws, c. 254, §  2 ; 77 Del. Laws, c. 98, §§  3-5 ; 77 Del. Laws, c. 330, §§  1, 2 ; 78 Del. Laws, c. 117, §  2 ; 79 Del. Laws, c. 172, §  2 ; 81 Del. Laws, c. 149, § 1 ; 81 Del. Laws, c. 320, § 4 ; 82 Del. Laws, c. 52, § 1 ; 84 Del. Laws, c. 182, § 2 ; 84 Del. Laws, c. 391, § 3 ; 85 Del. Laws, c. 156, § 4 ; 85 Del. Laws, c. 160, § 1 ; § 3302 Degree of care; authorized investments [For application of this section, see 79 Del. Laws, c. 172, § 6]. (a) When investing, reinvesting, purchasing, acquiring, exchanging, retaining, selling and managing property for the benefit of another, a fiduciary shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use to attain the purposes of the account. In making investment decisions, a fiduciary may consider the general economic conditions, the anticipated tax consequences of the investment and the anticipated duration of the account and the needs of the beneficiaries; when considering the needs of the beneficiaries, the fiduciary may take into account the financial needs of the beneficiaries as well as the beneficiaries' personal values, including the beneficiaries' desire to engage in sustainable investing strategies that align with the beneficiaries' social, environmental, governance or other values or beliefs of the beneficiaries. (b) Within the limitations of the foregoing standard and considering individual investments as part of an overall investment strategy, a fiduciary is authorized to acquire every kind of property, real, personal or mixed, and every kind of investment, wherever located, whether within or without the United States, including, but not by way of limitation, bonds, debentures and other corporate obligations, stocks, preferred or common, shares or interests in common funds or common trust funds, securities of any open-end or closed-end management type investment company or investment trust registered under the Federal Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.), options, futures, warrants, limited partnership interests and life insurance. No investment made by a fiduciary shall be deemed imprudent solely because the investment is not specifically mentioned in this subsection. (c) The propriety of an investment decision is to be determined by what the fiduciary knew or should have known at the time of the decision about: (1) The inherent nature and expected performance of the investment portfolio; (2) The limitations of the standard set forth in subsection (a) of this section; and (3) The nature and extent of other investments and resources, whether held in trust or otherwise, available to the beneficiaries as they existed at the time of the decision; provided however, that the fiduciary shall have no duty to inquire as to the nature and extent of any such other investments and resources not held by the fiduciary, held by the fiduciary in a trust or trust account subject to the direction of an adviser or cotrustee authorized to direct the fiduciary with respect to investment decisions, within the meaning of § 3313(d) of this title, concerning the assets held in the trust or trust account, or held by the fiduciary in a trust or trust account where a cotrustee has exclusive authority with respect to investment decisions, within the meaning of § 3313(d) of this title, concerning the assets held in the trust or trust account. Any determination of liability for investment performance shall consider the performance of the entire portfolio and such other factors as the fiduciary considered when the investment decision was made. (d) Notwithstanding the foregoing provisions of this section, a trustee who discloses the application of this subsection and the limitation of the trustee’s duties thereunder either in the governing instrument or in a separate writing delivered to each insured at the inception of a contract of life insurance or thereafter if prior to an event giving rise to a claim thereunder, may acquire or retain a contract of life insurance upon the life of the trustor or the trustor’s spouse, or both, without liability for a loss arising from the trustee’s failure to: (1) Determine whether the contract is or remains a proper investment; (2) Investigate the financial strength or changes in the financial strength of the life insurance company; (3) Make a determination of whether to exercise any policy option available under the contract; (4) Make a determination of whether to diversify such contracts relative to 1 another or to other assets, if any, administered by the trustee; or (5) Inquire about changes in the health or financial condition of the insured or insureds relative to any such contract. (e) Any fiduciary acting under a governing instrument shall not be liable to anyone whose interests arise from that instrument for breach of fiduciary duty for the fiduciary’s good faith reliance on the express provisions of such instrument. The standards set forth in this section may be expanded, restricted or eliminated by express provisions in a governing instrument. (f) Where a bank or trust company acting in a fiduciary capacity invests trust funds in, or otherwise acquires an interest in, a common trust fund which it or 1 of its affiliates manages, as defined in § 23A of the Federal Reserve Act (12 U.S.C. § 371c), the plan for such common trust fund shall be filed and recorded in the office of the Register in Chancery of the county in which is located the main office in Delaware of the bank or trust company which is the fiduciary for such trust funds. (g) Fees may be charged for making an investment through a computerized or automated process, such as sweeping otherwise uninvested cash into a cash management vehicle, provided that the amount of such fees is disclosed on a continuing basis as a separate item on the regular periodic statements furnished to the beneficiaries of the account. (h) A fiduciary is authorized, in the absence of an express provision to the contrary, whenever a law, regulation, governing instrument or order directs, requires, authorizes or permits investment in United States government obligations, to invest in those obligations, either directly or in the form of securities of, or other interests in, any open-end or closed-end management investment company or investment trust registered under the Investment Company Act of 1940 (54 Stat. 847, 15 U.S.C. § 80a-1 et seq.), if the portfolio of that investment company or investment trust is limited to United States government obligations and to repurchase agreements fully collateralized by United States government obligations, which collateral shall be delivered to or held by the investment company or investment trust, either directly or through an authorized custodian. (i) Except in the case of United States government obligations, which are treated in subsection (h) of this section above, the authority to invest in specified types of investments includes authorization to invest in any open-end or closed-end management investment company or investment trust registered under the Investment Company Act of 1940 (54 Stat. 847, 15 U.S.C. § 80a-1 et seq.), or in any common or collective trust fund established and maintained by a corporate fiduciary, if the portfolio of the investment company or investment trust, or of the common or collective trust fund, consists substantially of the specified types of investments and is otherwise in conformity with the laws of the State. 25 Del. Laws, c. 226, §  3 ; Code 1915, §  3875; 37 Del. Laws, c. 259, §  1 ; 40 Del. Laws, c. 230, §  1 ; Code 1935, §  4401; 44 Del. Laws, c. 171, §  1 ; 12 Del. C. 1953, §  3302; 64 Del. Laws, c. 141, §  3 ; 65 Del. Laws, c. 422, §  5 ; 72 Del. Laws, c. 55 ; 74 Del. Laws, c. 81, §§  1, 2 ; 75 Del. Laws, c. 97, §  18 ; 79 Del. Laws, c. 172, §  2 ; 81 Del. Laws, c. 320, § 4 ; § 3303 Effect of provisions of instrument [For application of this section, see 79 Del. Laws, c. 172, § 6]. (a) Notwithstanding any other provision of this Code or other law, the terms of a governing instrument may expand, restrict, eliminate, or otherwise vary any laws of general application to fiduciaries, trusts, and trust administration, including, but not limited to, any such laws pertaining to: (1) The rights and interests of beneficiaries, including, but not limited to, the right to be informed of the beneficiary’s interest for a period of time, as set forth in subsection (c) of this section; (2) The grounds for removal of a fiduciary; (3) The circumstances, if any, in which the fiduciary must diversify investments; (4) The manner in which a fiduciary should invest assets, including whether to engage in 1 or more sustainable or socially responsible investment strategies, in addition to, or in place of, other investment strategies, with or without regard to investment performance; (5) A fiduciary’s powers, duties, standard of care, rights of indemnification and liability to persons whose interests arise from that instrument; and (6) The terms of a power of appointment over trust property; provided, however, that nothing contained in this section shall be construed to permit the exculpation or indemnification of a fiduciary for the fiduciary’s own wilful misconduct or preclude a court of competent jurisdiction from removing a fiduciary on account of the fiduciary’s wilful misconduct. The rule that statutes in derogation of the common law are to be strictly construed shall have no application to this section. It is the policy of this section to give maximum effect to the principle of freedom of disposition and to the enforceability of governing instruments. (b) In furtherance of and not in limitation of the provisions of subsection (a) of this section, the terms of a governing instrument of a trust established and existing for religious, charitable, scientific, literary, or educational purposes or for noncharitable purposes shall not be modified by the court to change the trust’s purposes unless the purposes of the trust have become unlawful under the Constitution of this State or the United States or the trust would otherwise no longer serve any religious, charitable, scientific, literary, educational, or noncharitable purpose, in which case the court shall proceed in the manner directed by § 3541 of this title. A settlor may maintain an action to enforce a charitable or noncharitable trust under this section and may designate a person or persons, whether or not born at the time of such designation, to enforce a charitable or noncharitable trust under this section. For purposes of this subsection, a “noncharitable purpose” is a purpose within the meaning of § 3555 or § 3556 of this title. (c) The terms of a governing instrument may expand, restrict, eliminate, or otherwise vary the right of a beneficiary to be informed of the beneficiary’s interest in a trust for a period of time, including but not limited to: (1) A period of time related to the age of a beneficiary; (2) A period of time related to the lifetime of each trustor and/or spouse of a trustor; (3) A period of time related to a term of years or specific date; and/or (4) A period of time related to a specific event that is certain to occur. (d) During any period of time that a governing instrument restricts or eliminates the right of a beneficiary to be informed of the beneficiary’s interest in a trust, unless otherwise provided in the governing instrument, any designated representative (as defined in § 3339 of this title) then serving shall represent and bind such beneficiary for purposes of any judicial proceeding and for purposes of any nonjudicial matter, and shall have the authority to, and is a proper party to, initiate a proceeding relating to the trust before a court or administrative tribunal on behalf of any such beneficiary. (e) For purposes of this section, “judicial proceeding” means any proceeding before a court or administrative tribunal, including but not limited to, a proceeding that involves a trust whether or not the administration of the trust is governed by the laws of this State, and “nonjudicial matter” includes, but is not limited to, the grant of consents, releases or ratifications pursuant to § 3588 of this title and the receipt of a report for purposes of measuring the limitation period described in § 3585 of this title. 25 Del. Laws, c. 226, §  3 ; Code 1915, §  3875; 37 Del. Laws, c. 259, §  1 ; 40 Del. Laws, c. 230, §  1 ; Code 1935, §  4401; 44 Del. Laws, c. 171, §  1 ; 47 Del. Laws, c. 19, §  1 ; 48 Del. Laws, c. 41, §  1 ; 12 Del. C. 1953, §  3303; 59 Del. Laws, c. 271, §  3 ; 72 Del. Laws, c. 388, §  9 ; 74 Del. Laws, c. 82, §  1 ; 75 Del. Laws, c. 97, §  3 ; 76 Del. Laws, c. 90, §  1 ; 76 Del. Laws, c. 254, §  3 ; 79 Del. Laws, c. 172, §  2 ; 79 Del. Laws, c. 352, §  2 ; 80 Del. Laws, c. 89, §  1 ; 81 Del. Laws, c. 320, § 4 ; 82 Del. Laws, c. 52, § 1 ; § 3304 Retention by fiduciary of decedent’s or settlor’s investments. Unless expressly provided otherwise in any instrument specified in § 3303 of this title, any provisions in any such instrument prescribing, defining or limiting the kind of property in which the funds of the trust to which such instrument relates shall be invested shall not apply to any property owned by a testator at the time of the testator’s death and delivered to the fiduciary by the personal representative of such testator who has created a trust by the testator’s will or delivered by the settlor to the fiduciary of a trust created in a trust agreement or delivered to the fiduciary pursuant to a court order or other instrument creating or defining the fiduciary’s duties and powers and such fiduciary may retain all such property so acquired, subject to the limitations of the standards set forth in § 3302 of this title. Furthermore, a provision in any such instrument directing the retention of any such property as a trust investment shall be deemed to waive any duty of diversification otherwise applicable to the fiduciary with respect to such property and shall exonerate the fiduciary from liability for retaining the property except in the case of wilful misconduct proven by clear and convincing evidence in the Court of Chancery. 25 Del. Laws, c. 226, §  3 ; Code 1915, §  3875; 37 Del. Laws, c. 259, §  1 ; 40 Del. Laws, c. 230, §  1 ; Code 1935, §  4401; 44 Del. Laws, c. 171, §  1 ; 48 Del. Laws, c. 41, §  1 ; 12 Del. C. 1953, §  3304; 70 Del Laws, c. 186,, §  1; 77 Del. Laws, c. 330, §  3 ; § 3305 Retention by bank or trust company acting as a fiduciary of its own stock. Unless expressly provided otherwise in any instrument specified in § 3303 of this title, a bank or trust company acting as a fiduciary and authorized so to act may retain in a trust estate shares of its own capital stock acquired in any manner referred to in § 3304 of this title, as effectively as though the instrument creating or defining the fiduciary’s duties and powers expressly so provided, subject to the limitations of the standards set forth in § 3302 of this title. 25 Del. Laws, c. 226, §  3 ; Code 1915, §  3875; 37 Del. Laws, c. 259, §  1 ; 40 Del. Laws, c. 230, §  1 ; Code 1935, §  4401; 44 Del. Laws, c. 171, §  1 ; 47 Del. Laws, c. 19, §  1 ; 48 Del. Laws, c. 41, §  1 ; 12 Del. C. 1953, §  3305; § 3306 Deviation from terms of instrument. Subject to the provisions of § 3303 of this title, nothing contained in this chapter shall be construed as restricting the power of a court of proper jurisdiction to permit fiduciaries to deviate from the terms of any will, agreement or other instrument relating to the acquisition, investment, reinvestment, exchange, retention, sale or management of fiduciary property. 25 Del. Laws, c. 226, §  3 ; Code 1915, §  3875; 37 Del. Laws, c. 259, §  1 ; 40 Del. Laws, c. 230, §  1 ; Code 1935, §  4401; 44 Del. Laws, c. 171, §  1 ; 12 Del. C. 1953, §  3306; 76 Del. Laws, c. 254, §  4 ; § 3307 Common fund investments by bank or trust company; regulations. (a) A bank or trust company authorized to act in a fiduciary capacity or in the capacity of agent with investment discretion, and acting in such capacity, may invest funds held by it for investment in fractional undivided interests in a common fund composed exclusively of property permitted for investment by the terms of § 3302 of this title and of cash, if such common fund shall have been created and is managed by any bank or trust company authorized to act in a fiduciary capacity, as trustee under a written plan, an original copy of which, executed by such bank or trust company, has been filed and is recorded in the Office of the Register in Chancery of the county in which the main office of such bank or trust company is located. Under such plan it shall not be permitted that any such fractional interests shall at any time be owned by other than a bank or trust company as fiduciary under will, under agreement or for a person with a mental condition or as guardian of a minor or of the property of a person who is elderly or impaired or a person with a mental condition or physical disability or as executor or administrator or as custodian pursuant to Chapter 45 of this title or as agent with investment discretion. (b) At least once each 3 months, as of a predetermined date, a bank or trust company administering a common fund shall determine the fair value of the assets in the common fund. No fractional interest in the common fund shall be acquired or redeemed except on the basis of such valuation and as of such valuation date. A fractional interest in such common fund may only be acquired by payment: (1) In cash; or (2) In property other than cash, provided that such property other than cash is a permissible investment under the terms of § 3302 of this title and under the terms of the plan of a common fund. If a fractional interest is acquired with property other than cash, such property shall be valued for the purposes of the acquisition in the same manner as assets are valued when held in the common fund and the purchaser shall bear all costs of the transfer to the common fund of title to such property. A fractional interest in such common fund may be redeemed by payment of an amount in cash, or ratably in kind, or partly in cash and partly in kind, equal to its proportionate part of the fair value of the common fund. A reasonable period following each such predetermined date may be used to make the computations necessary to determine the value of the common fund and of the participations therein. (c) Unless a bank or trust company making an investment for an account in a common fund shall find that the investments of the common fund as a whole are ones in which the funds of such account might not properly be invested at the time, the investment in such common fund shall not be improper. (d) The bank or trust company may charge a fee or commission to the common fund for its management and receive fees or commissions from participating accounts which may be invested in a common fund in addition to those it would be entitled to receive if such accounts were otherwise invested. 25 Del. Laws, c. 226, §  3 ; Code 1915, §  3875; 37 Del. Laws, c. 259, §  1 ; 40 Del. Laws, c. 230, §  1 ; Code 1935, §  4401; 43 Del. Laws, c. 224, §  1 ; 44 Del. Laws, c. 171, §  1 ; 46 Del. Laws, c. 268, §  1 ; 12 Del. C. 1953, §  3307; 55 Del. Laws, c. 209 ; 63 Del. Laws, c. 207, §  1 ; 63 Del. Laws, c. 280, §  1 ; 78 Del. Laws, c. 179, §§  78, 79 ; § 3308 Power of bank or trust company acting as a fiduciary to purchase property held by its commercial or banking department. (a) A bank or trust company shall not purchase, with funds held by it as a fiduciary, any property held by its commercial or banking department, but this prohibition shall not apply to mortgages and their accompanying bonds designated by its commercial or banking department for future trust investment at the time of acquisition by the commercial or banking department and purchased within 1 year from such time of acquisition with funds held by it in its trust department; provided the interest and taxes are current at the time of purchase by the trust department and an appraisal certificate on the real estate covered by the mortgages being purchased from at least 1 person competent and qualified to appraise real estate is obtained by the trust department at any time within 10 days prior to the purchase by and transfer to the trust department. This exception shall apply to all types of mortgages held by the commercial or banking department, including mortgages covering properties constructed during the 1-year period from the time the mortgages were acquired by the commercial or banking department; provided, with respect to the latter type of mortgages, that an appraisal certificate on the completed property from at least 1 person competent and qualified to appraise such property and a certificate from the owner of the property and/or the registered architect who planned the construction of the property certifying that the construction is complete and satisfactory in every respect, are obtained by the trust department at any time within 10 days prior to the purchase by and transfer to said department. (b) The commercial or banking department shall make a report monthly to the board of directors of the bank or trust company listing all mortgages designated for trust investment and covering all transactions relating thereto and such report shall be noted in the minutes of the meeting of the board. (c) The purchase of mortgages and their accompanying bonds permitted by this section shall be made subject to the limitations of the standard set forth in § 3302 of this title. 25 Del. Laws, c. 226, §  3 ; Code 1915, §  3875; 37 Del. Laws, c. 259, §  1 ; 40 Del. Laws, c. 230, §  1 ; Code 1935, §  4401; 48 Del. Laws, c. 226, §  1 ; 12 Del. C. 1953, §  3308; § 3309 Identification of securities. (a) Except as otherwise provided by the terms of the governing instrument, all securities in a fiduciary estate, whether held by the fiduciary or an agent for the fiduciary, shall be held in such manner that the fiduciary’s name and the fiduciary capacity in which the securities are held are fully disclosed, except as provided hereafter in this section or in § 3311 of this title. (b) A bank or trust company acting as fiduciary or as agent for a fiduciary or nonfiduciary may hold securities in the name of its nominee without disclosing the capacity in which they are held, provided the records maintained with respect to those securities disclose the capacity in which they are held and provided there is no written objection from either a cofiduciary or the person for whom it is acting as agent. 59 Del. Laws, c. 271, §  4 ; § 3310 Storage of securities. (a) Except as otherwise provided by the terms of the governing instrument, all securities in a fiduciary estate, whether held by the fiduciary or an agent for the fiduciary, shall be stored separately from any other securities, except as provided hereafter in this section or in § 3311 of this title. (b) A bank or trust company may store together securities of the same class of the same issuer held by it as fiduciary or as agent for a fiduciary or nonfiduciary (but not its own securities) and may combine the securities so stored together into 1 or more securities of the same class of the same issuer, provided the records maintained with respect to those securities disclose the capacity in which they are held and provided there is no written objection from either a cofiduciary or the person for whom it is acting as agent. 59 Del. Laws, c. 271, §  5 ; § 3311 Deposit of securities in clearing corporation. (a) Except as otherwise provided by the terms of the governing instrument, a bank or trust company may deposit or arrange for the deposit of in a clearing corporation securities held by it as fiduciary or as agent for a fiduciary or nonfiduciary, provided the records maintained with respect to those securities by such bank or trust company disclose the capacity in which they are held and provided there is no written objection from either a cofiduciary or the person for whom it is acting as agent. (b) Securities deposited in a clearing corporation may be registered in the name of either the clearing corporation or its nominee without disclosing the capacity in which they are held. (c) Securities deposited in a clearing corporation may be stored together with other securities of the same class of the same issuer also stored in the clearing corporation (but not the securities of the clearing corporation) and may be combined with such other securities into 1 or more securities of the same class of the same issuer. 59 Del. Laws, c. 271, §  6 ; 61 Del. Laws, c. 489, §  1 ; § 3312 Investments in affiliated investments; transactions with affiliates [For application of this section, see 80 Del. Laws, c. 153, § 5]. (a) As used in this section: (1) “Affiliate” means any corporation or other entity that directly or indirectly through 1 or more intermediaries controls, is controlled by or is under common control with the fiduciary. (2) “Affiliated investment” means an investment for which the fiduciary or an affiliate of the fiduciary acts as adviser, administrator, distributor, placement agent, underwriter, broker or in any other capacity for which it receives or has received a fee or commission from such investment or an investment acquired or disposed of in a transaction for which the fiduciary or an affiliate of the fiduciary receives or has received a fee or commission. (3) “Fee or commission” means compensation paid to a fiduciary or an affiliate thereof on account of its services to or on behalf of an investment. (4) “Fiduciary” means any person, including a bank or trust company, acting as a fiduciary as defined in § 3301 of this title, and includes an agent with investment discretion, whether or not such investment discretion has been delegated to such agent by another fiduciary or fiduciaries or granted directly to such agent. (5) “Governing instrument” means any governing instrument as defined in § 3301 of this title, and includes any agreement or instrument granting fiduciary investment discretion. (6) “Investment” shall mean any security as defined in § 2(a)(1) of the Securities Act of 1933 [15 U.S.C. § 77b(a)(1)], any contract of sale of a commodity for future delivery within the meaning of § 2(i) of the Commodity Exchange Act [7 U.S.C. § 1 et seq.], or any other asset permitted for fiduciary accounts pursuant to the terms of § 3302 of this title or by the terms of the governing instrument, including by way of illustration and not limitation, shares or interests in a private investment fund (including a private investment fund organized as a limited partnership, limited liability company, a statutory or common law business trust, or a real estate investment trust), joint venture or other general or limited partnership, or an open-end or closed-end management type investment company or investment trust registered under the Investment Company Act of 1940. (b) Subject to the investment standards stated in § 3302 of this title, a fiduciary may purchase, sell, hold or otherwise deal with an affiliate or an interest in an affiliated investment and, upon satisfaction of the conditions stated in subsection (c) of this section, such fiduciary may receive fiduciary compensation from such account at the same rate as the fiduciary would otherwise be entitled to be compensated. (c) A fiduciary seeking compensation pursuant to subsection (b) of this section shall disclose to each principal in an agency relationship, and to all current recipients of account statements of any other fiduciary account, all fees or commissions paid or to be paid by the account, or received or to be received by an affiliate arising from such affiliated investment or such other dealing with an affiliate. The disclosure required under this subsection may be given either in a copy of the prospectus or any other disclosure document prepared for the affiliated investment under federal or state securities laws or in a written summary that includes all fees or commissions received or to be received by the fiduciary or any affiliate of the fiduciary and an explanation of the manner in which such fees or commissions are calculated (either as a percentage of the assets invested or by some other method). Such disclosure shall be made at least annually unless there has been no increase in the rate at which such fees or commissions are calculated since the most recent disclosure. Notwithstanding the foregoing provisions of this subsection, no such disclosure is required if: (1) The governing instrument or a court order expressly authorizes the fiduciary to invest the fiduciary account in affiliated investments or otherwise deal with an affiliate or an interest in an affiliated investment; or (2) The fiduciary invests in an affiliated investment or otherwise deals with an affiliate or an interest in an affiliated investment at the direction of an adviser (who expressly directs the fiduciary to enter into a transaction that would otherwise require disclosure under this subsection and who is not an affiliate) pursuant to subsection (b) of § 3313 of this title. (d) A fiduciary that has complied with subsection (c) of this section (whether by making the applicable disclosure or by relying on the terms of a governing instrument or court order) shall have full authority to administer an affiliated investment (including the authority to vote proxies thereon) without regard to the affiliation between the fiduciary and the investment. 65 Del. Laws, c. 422, §  5 ; 72 Del. Laws, c. 33, §  1 ; 73 Del. Laws, c. 329, §  54 ; 74 Del. Laws, c. 82, §  2 ; 74 Del. Laws, c. 268, §  1–5 ; 77 Del. Laws, c. 330, §  4 ; 80 Del. Laws, c. 153, §  3 ; 81 Del. Laws, c. 149, § 1 ; § 3313 Advisers [For application of this section, see 80 Del. Laws, c. 153, § 5]. (a) Where 1 or more persons are given authority by the terms of a governing instrument to direct, consent to or disapprove a fiduciary’s actual or proposed investment decisions, distribution decisions or other decision of the fiduciary, such persons shall be considered to be advisers and fiduciaries when exercising such authority provided, however, that the governing instrument may provide that any such adviser (including a protector) shall act in a nonfiduciary capacity. (b) If a governing instrument provides that a fiduciary is to follow the direction of an adviser or is not to take specified actions except at the direction of an adviser, and the fiduciary acts in accordance with such a direction, then except in cases of wilful misconduct on the part of the fiduciary so directed, the fiduciary shall not be liable for any loss resulting directly or indirectly from any such act. (c) If a governing instrument provides that a fiduciary is to make decisions with the consent of an adviser, then except in cases of wilful misconduct or gross negligence on the part of the fiduciary, the fiduciary shall not be liable for any loss resulting directly or indirectly from any act taken or omitted as a result of such adviser’s objection to such act or failure to provide such consent after having been requested to do so by the fiduciary. (d) For purposes of this section, unless the terms of the governing instrument provide otherwise, “investment decision” means with respect to all of the trust’s investments (or, if applicable, to investments specified in the governing instrument), the retention, purchase, sale, exchange, tender or other transaction or decision affecting the ownership thereof or rights therein (including the powers to borrow and lend for investment purposes, provided, however, that the power to lend for investment purposes shall be considered an investment decision only with respect to loans other than those described in § 3325(19)b. and c. of this title), all management, control and voting powers related directly or indirectly to such investments (including, without limitation, nonpublicly traded investments), the selection of custodians or subcustodians other than the trustee, the selection and compensation of, and delegation to, investments advisers, managers or other investment providers, and with respect to nonpublicly traded investments, the valuation thereof, and an adviser with authority with respect to such decisions is an investment adviser. (e) Whenever a governing instrument provides that a fiduciary is to follow the direction of an adviser with respect to investment decisions, distribution decisions, or other decisions of the fiduciary or shall not take specified actions except at the direction of an adviser, then, except to the extent that the governing instrument provides otherwise, the fiduciary shall have no duty to: (1) Monitor the conduct of the adviser; (2) Provide advice to the adviser or consult with the adviser; or (3) Communicate with or warn or apprise any beneficiary or third party concerning instances in which the fiduciary would or might have exercised the fiduciary’s own discretion in a manner different from the manner directed by the adviser. Absent clear and convincing evidence to the contrary, the actions of the fiduciary pertaining to matters within the scope of the adviser’s authority (such as confirming that the adviser’s directions have been carried out and recording and reporting actions taken at the adviser’s direction), shall be presumed to be administrative actions taken by the fiduciary solely to allow the fiduciary to perform those duties assigned to the fiduciary under the governing instrument and such administrative actions shall not be deemed to constitute an undertaking by the fiduciary to monitor the adviser or otherwise participate in actions within the scope of the adviser’s authority. (f) For purposes of this section, the term “adviser” shall include a “protector” who shall have all of the power and authority granted to the protector by the terms of the governing instrument, which may include but shall not be limited to: (1) The power to remove and appoint trustees, advisers, trust committee members, and other protectors; (2) The power to modify or amend the governing instrument to achieve favorable tax status or to facilitate the efficient administration of the trust; and (3) The power to modify, expand, or restrict the terms of a power of appointment granted to a beneficiary by the governing instrument. (g) A person who accepts appointment as an adviser of a trust, or acts as an adviser of a trust under this section, submits to personal jurisdiction of this State regarding any matter related to the trust. This provision does not preclude other methods of obtaining jurisdiction over such adviser of a trust. 65 Del. Laws, c. 422, §  5 ; 69 Del. Laws, c. 279, §  1 ; 74 Del. Laws, c. 82, §  3 ; 76 Del. Laws, c. 90, §  2 ; 76 Del. Laws, c. 254, §  5 ; 78 Del. Laws, c. 117, §  3 ; 79 Del. Laws, c. 197, §  1 ; 80 Del. Laws, c. 153, §  3 ; 81 Del. Laws, c. 320, § 4 ; § 3313A Excluded cotrustee. (a) If the terms of a governing instrument confer upon a cotrustee, to the exclusion of another cotrustee, the power to take certain actions with respect to the trust, including the power to direct or prevent certain actions of the trustees, the duty and liability of the excluded trustee is as follows: (1) If the terms of the governing instrument confer upon the cotrustee the power to direct certain actions of the excluded trustee, the excluded trustee must act in accordance with the direction and shall have no duty to act in the absence of such direction and is not liable, individually or as a fiduciary, for any loss resulting directly or indirectly from compliance with the direction unless compliance with the direction constitutes wilful misconduct on the part of the directed cotrustee; (2) If the terms of the governing instrument confer upon the cotrustee exclusive authority to exercise any power, the excluded trustee is not liable, individually or as a fiduciary, for any loss resulting directly or indirectly from the action taken by the cotrustee in the exercise of the power, such that the excluded trustee shall not be a fiduciary with respect to any power as to which the governing instrument has conferred upon the cotrustee exclusive authority in accordance with this paragraph (a)(2), but shall remain a fiduciary with respect to any powers or other matters as to which the governing instrument has not conferred exclusive authority on the cotrustee; and (3) The excluded trustee has no duty to monitor the conduct of the cotrustee, provide advice to the cotrustee or consult with or request directions from the cotrustee. The excluded trustee is not required to give notice to any beneficiary of any action taken or not taken by the cotrustee whether or not the excluded trustee agrees with the result. Administrative actions taken by the excluded trustee for the purpose of implementing directions of the cotrustee, including confirming that the directions of the cotrustee have been carried out, do not constitute monitoring of the cotrustee nor do they constitute participation in decisions within the scope of the cotrustee’s authority. (b) The cotrustee holding the power to take certain actions with respect to the trust shall be liable to the beneficiaries with respect to the exercise of the power as if the excluded trustee were not in office and shall have the exclusive obligation to account to the beneficiaries and defend any action brought by the beneficiaries with respect to the exercise of the power. 81 Del. Laws, c. 149, § 1 ; 81 Del. Laws, c. 320, § 4 ; § 3314 Limitation on certain fiduciary powers. (a) This section shall apply to: (1) Any trust created under a governing instrument that, but for this section, would permit any of the powers described in subsection (c) of this section to be exercised by the fiduciary unless the governing instrument expressly provides that this section does not apply. (2) For purposes of this section, the term “fiduciary” means any trustee or trust adviser or the personal representative of an estate except to the extent the governing instrument expressly states that such person is not serving in a fiduciary capacity. (b) This section shall not apply to: (1) Any trust during the time that the trust is revocable or amendable by its trustor. (2) A spouse of a decedent or trustor where the spouse is a fiduciary of a testamentary or inter vivos trust for which a marital deduction has been allowed. (3) A fiduciary who possesses in such fiduciary’s individual, nonfiduciary, capacity an unlimited right to appoint all or part of the property held in trust to the fiduciary, the fiduciary’s estate, the fiduciary’s creditors, or the creditors of the fiduciary’s estate. (4) A trust under a governing instrument that by specific reference expressly rejects the application of this section. (5) A trust created under a governing instrument executed on or before August 1, 2008, if, in the case of a fiduciary’s possessing a power described in subsection (c) of this section and dying at any time on or after August 1, 2008, no part of the property of the trust would be included in the gross estate of the fiduciary for federal estate-tax purposes or, notwithstanding that all or some part of the property held in trust would be so included, no federal estate tax would be payable by such estate. (6) A trust created under a governing instrument executed on or before August 1, 2008, if, in the case of a beneficiary’s possessing a power to appoint a trustee and dying at any time on or after August 1, 2008, no part of the property of the trust would be included in the gross estate of the beneficiary for federal estate-tax purposes or, notwithstanding that all or some part of the property held in trust would be so included, no federal estate tax would be payable by such estate. (c) The following powers conferred by a governing instrument upon a fiduciary in that fiduciary’s capacity as a fiduciary shall not be exercised by that fiduciary: (1) The power to make discretionary distributions of either principal or income to or for the benefit of the fiduciary, the fiduciary’s estate, the creditors of the fiduciary, or the creditors of the fiduciary’s estate unless the power is either: a. Limited by an ascertainable standard relating to the fiduciary’s health, education, support, or maintenance within the meaning of 26 U.S.C. §§ 2041 (relating to powers of appointment) and 2514 (relating to powers of appointment); or b. Exercisable by the fiduciary only in conjunction with another person having a substantial interest in the property subject to the power which is adverse to the interest of the fiduciary within the meaning of 26 U.S.C. § 2041(b)(1)(C)(ii). (2) The power to make discretionary distributions of either principal or income to satisfy any of the fiduciary’s personal legal obligations for support or other purposes. (3) The power to make discretionary allocations in the fiduciary’s personal favor of receipts or expenses as between income and principal unless the fiduciary has no power to enlarge or shift any beneficial interest except as an incidental consequence of the discharge of the fiduciary’s duties. (4) The power to exercise any of the powers proscribed in this subsection with regard to an individual other than the fiduciary to the extent that the individual could exercise a similar prohibited power in connection with a trust that benefits the fiduciary. (5) The power to make an election, other than an election under 26 U.S.C. §§ 2056(b)(7) and 2523(f) (relating to the federal estate-tax and gift-tax marital deductions), in a fiduciary capacity that would cause the property over which the election could be made to be included in the gross estate of the fiduciary for federal estate-tax purposes. (d) Notwithstanding the foregoing provisions: (1) If a fiduciary is prohibited by this section from exercising a power conferred upon the fiduciary, the fiduciary nevertheless may exercise that power but shall be limited to distributions for the fiduciary’s health, education, support, or maintenance to the extent otherwise permitted by the terms of the trust. (2) Unless otherwise prohibited by the provisions of this section, a fiduciary may exercise a power described herein in favor of someone other than the fiduciary, the fiduciary’s estate, the creditors of the fiduciary, or the creditors of the fiduciary’s estate. (3) Subject to the preceding paragraphs of this subsection, any purported exercise of a power proscribed by subsection (c) of this section shall be void and of no effect. (e) If a governing instrument creates a power proscribed by this section: (1) If the power is conferred on 2 or more fiduciaries, it may be exercised by the fiduciary or fiduciaries who are not so prohibited as if they were the only fiduciary or fiduciaries. (2) If there is no fiduciary in office who can exercise the power as provided in paragraph (e)(1) of this section, the court, upon petition and hearing after such notice as it may direct, shall appoint a fiduciary who is not disqualified and whose term in office shall be as the court directs for the sole purpose of exercising the power that the other fiduciary or fiduciaries cannot exercise. (3) The court may, upon petition by any fiduciary or beneficiary of the trust subject to the power, appoint an additional fiduciary or fiduciaries. (f) No beneficiary of a trust in an individual, fiduciary, or other capacity may appoint, or remove and appoint, a fiduciary who is related or subordinate to the beneficiary within the meaning of 26 U.S.C. § 672(c) unless: (1) The fiduciary’s discretionary power to make distributions to or for the beneficiary is limited by an ascertainable standard relating to the beneficiary’s health, education, support, or maintenance within the meaning of 26 U.S.C. §§ 2041 and 2514; (2) The fiduciary’s discretionary power may not be exercised to satisfy any of the beneficiary’s legal obligations for support or other purposes; and (3) The fiduciary’s discretionary power may not be exercised to grant to the beneficiary a general power to appoint property of the trust to the beneficiary, the beneficiary’s estate, or the creditors thereof within the meaning of 26 U.S.C. § 2041. (4) This subsection shall not apply if the appointment of the fiduciary by the beneficiary may be made only in conjunction with another person having a substantial interest in the property of the trust subject to the power which is adverse to the exercise of the power in favor of the beneficiary within the meaning of 26 U.S.C. § 2041(b)(1)(C)(ii). 76 Del. Laws, c. 254, §  6 ; 70 Del. Laws, c. 186, §  1 ; § 3315 Trustee’s exercise of discretion; review by court; discretionary interests. (a) Where discretion is conferred upon the fiduciary with respect to the exercise of a power, its exercise by the fiduciary shall be considered to be proper unless the court determines that the discretion has been abused within the meaning of § 187 of the Restatement (Second) of Trusts, not §§ 50 and 60 of the Restatement (Third) of Trusts. (b) A beneficiary eligible to receive distributions from a trust in the discretion of a fiduciary has a discretionary interest in the trust. A discretionary interest in a trust is a mere expectancy, not a property right. A beneficiary eligible to receive distributions from a trust in the discretion of a fiduciary, even if subject to an ascertainable standard (as defined in Treas. Reg. § 20.2041-1(c)(2) (26 CFR § 20.2041-1(c)(2)) or any successor provision thereto), has a discretionary interest in the trust. An interest that includes mandatory distribution language such as “shall” but is qualified by discretionary distribution language is a discretionary interest. A beneficiary that has a discretionary interest in a trust shall not be deemed to have a right to compel a distribution from the trust. Nothing within this subsection, however, shall be deemed to alter the standard of review of the discretion of the fiduciary under subsection (a) of this section. A creditor may not directly or indirectly compel the distribution of a discretionary interest except to the extent expressly granted by the terms of a governing instrument in accordance with § 3536(a) of this title. (c) In connection with the exercise of a discretionary power conferred on a trustee or other fiduciary of a trust in the trust’s governing instrument, the trustee’s or other fiduciary’s decision whether or not to consider 1 or more letters of wishes, as defined in § 3301(g) of this title, is subject to the standard of review of the discretion of the trustee or other fiduciary under subsection (a) of this section. (1) The trustee or other fiduciary may consider 1 or more letters of wishes, whenever created, and whether or not the governing instrument is ambiguous, if the letter of wishes meets all of the following: a. Has been delivered to a trustee of the trust by or on behalf of the trustor. b. Reflects the trustor’s intent contemporaneous with the date of execution of the governing instrument, which intent may be reflected in facts and circumstances known to the trustor, or not known to or anticipated by the trustor, as of the date of execution of the governing instrument. c. Is not inconsistent with any provision of the governing instrument. (2) A trustee’s or other fiduciary’s decision not to consider a letter of wishes with respect to an unambiguous provision of a governing instrument is not an abuse of discretion under subsection (a) of this section. (3) A trustee’s or other fiduciary’s decision not to consider a letter of wishes not meeting the requirements of paragraph (c)(1) of this section is not an abuse of discretion under subsection (a) of this section. (4) A trustee’s or other fiduciary’s decision to consider a letter of wishes meeting the requirements of paragraph (c)(1) of this section, with respect to an ambiguous provision of a governing instrument, is not an abuse of discretion under subsection (a) of this section. (5) A letter of wishes is not binding on a trustee or other fiduciary under the governing instrument. A trustee or other fiduciary does not have a duty to follow the letter of wishes, and the fact that a trustee or other fiduciary does or does not exercise a discretionary power in accordance with the letter of wishes does not create an inference that the trustee or other fiduciary improperly exercised the power or abused the trustee’s or other fiduciary’s discretion under subsection (a) of this section. (6) Except as provided under the terms of the governing instrument or by court order, the trustee or other fiduciary does not have a duty to provide any beneficiary a copy of a letter of wishes. 76 Del. Laws, c. 254, §  7 ; 83 Del. Laws, c. 69, § 2 ; 84 Del. Laws, c. 391, § 4 ; 85 Del. Laws, c. 160, § 2 ; § 3316 Substituted property; equivalent value; fiduciary duty. Except as otherwise expressly provided by the terms of a governing instrument, if a trustor has a power to substitute property of equivalent value, the fiduciary responsible for investment decisions has a fiduciary duty to determine that the substituted property is of equivalent value prior to allowing the substitution. 77 Del. Laws, c. 330, §  5 ; 79 Del. Laws, c. 197, §  1 ; § 3317 Cofiduciaries and co-nonfiduciaries; duty to keep informed. Except as otherwise provided in a governing instrument, each trust fiduciary (including trustees, advisers, protectors, and other fiduciaries), and each trust nonfiduciary, has a duty upon request to keep all of the fiduciaries and nonfiduciaries for the trust reasonably informed about the administration of the trust with respect to any specific duty or function being performed by such fiduciary or nonfiduciary to the extent that providing such information to the other fiduciaries and nonfiduciaries is reasonably necessary for the other fiduciaries and nonfiduciaries to perform their duties; provided, however, that: (1) A fiduciary or nonfiduciary requesting and receiving any such information shall have no duty to: monitor the conduct of the fiduciary or nonfiduciary providing the information; provide advice to or consult with the fiduciary or nonfiduciary providing the information; or communicate with or warn or apprise any beneficiary or third party concerning instances in which the fiduciary or nonfiduciary receiving the information would or might have exercised the fiduciary's or nonfiduciary's own discretion in a manner different from the manner in which such discretion was actually exercised by the fiduciary or nonfiduciary providing the information; and (2) A fiduciary or nonfiduciary providing any such information shall have no duty to: monitor the conduct of the fiduciary or nonfiduciary requesting and receiving the information; provide advice to or consult with the fiduciary or nonfiduciary requesting and receiving the information; or communicate with or warn or apprise any beneficiary or third party concerning instances in which the fiduciary or nonfiduciary providing the information would or might have exercised the fiduciary's or nonfiduciary's own discretion in a manner different from the manner in which such discretion was actually exercised by the fiduciary or nonfiduciary requesting and receiving the information. 77 Del. Laws, c. 330, §  6 ; 81 Del. Laws, c. 320, § 4 ; § 3321 Applicability of chapter; definitions. Repealed 76 Del. Laws, c. 254, § 8. § 3322 Fiduciary agency contracts; delegation. (a) A fiduciary may appoint agents to assist in the performance of the fiduciary’s duties, pay such agents from the fiduciary fund and delegate investment, management, or other fiduciary duties to any such agent, including an agent who is a cofiduciary. (b) When a fiduciary, acting in the fiduciary’s discretion and not at the direction of any adviser, appoints an agent to assist in the performance of the fiduciary’s duties, the standard of care applicable to the fiduciary when personally performing such duties shall continue to apply to the fiduciary with respect to selecting and hiring the agent, paying the agent from the fiduciary fund, establishing the scope and specific terms of the agency relationship, and overseeing the agent’s actions and continuing the agency relationship, but the fiduciary shall not otherwise be liable for the conduct of such agent. The foregoing rule shall apply even if: (1) The aggregate amount paid to the agent and the fiduciary from the fiduciary fund exceeds the amount otherwise payable from the fiduciary fund to the fiduciary under subchapter V of Chapter 35 of this title or other applicable law; or (2) The standard of care applicable to the agent is a lower standard than the standard applicable to the fiduciary when personally performing duties to be performed by the agent. (c) When a fiduciary delegates investment, management, or other fiduciary duties to an agent, such delegation shall not cause the fiduciary to cease to be a fiduciary or cause the agent to be a fiduciary. 65 Del. Laws, c. 422, §  6 ; 73 Del. Laws, c. 47, §  1 ; 74 Del. Laws, c. 82, §  7 ; 75 Del. Laws, c. 300, §  1 ; 79 Del. Laws, c. 352, §  3 ; 82 Del. Laws, c. 52, § 1 ; § 3323 Cofiduciaries and co-nonfiduciaries. (a) Unless provided otherwise by the governing instrument, the following applies: (1) Any power vested in 2 fiduciaries or nonfiduciaries by the governing instrument or by law must be exercised by both of the fiduciaries or nonfiduciaries. (2