various pieces of rentable real property, such as tenement houses and stores, that there are also bonds and mortgages on real property, and in addition investments in corporate bonds, etc. If three individuals were acting, where the estate exceeded $100,000, as in such case it would, there would in the state of New York be three full commissions to be charged against both principal and income. The bank or the trust company, unless there were co-executors or trustees, could charge only one set of commissions.

In the case cited, the individual executors and trustees would have to establish an office and a force of clerks to handle the affairs of the estate. They would have to have a safedeposit box in which to safe-keep the securities. The expenses for all this, rent, salaries, stationery, telephone, etc., would be a proper charge against the estate, chargeable partly against principal and partly against income. There are many instances of just such cases of costly administration as that recited above.

If a bank or a trust company were the executor and trustee, either solely or jointly with an individual, all of these items would be considered overhead and no charge would be made and no part of the expense of this nature would come out of the estate. In other words, the bank or the trust company is equipped to handle just such estates, and can take care of the big ones as capably and as efficiently as the small and at less expense than can the individual fiduciary.

Individuals acting as administrators, executors and trustees are usually required to file bonds unless the will provides that they shall not. However, in the case of substituted trustees, that is, where the original trustees have died or resigned and new ones are appointed, they will in all cases be compelled to file a bond before they can qualify. The premiums for these bonds become quite a large item where the estate is of any size. Where there are trusts, the premium is payable every year.

When a bank or a trust company is appointed, no bonds are required because of the fact that they have great resources back of them in addition to having deposited securities with the banking authorities of the state in which they are located, and in the case of national banks there is further protection, as shown supra in § II K of the Federal Reserve Act.

§ 490. Care Required to Conserve Income

The fiduciary should consider not only the reduction of actual expense, but also any other economies or saving that can be accomplished. When an individual is the fiduciary, we must consider the waste incident to separate action as well as the fact that he has his own affairs to attend to, which, as has been said, will receive his first attention.

In an estate of any size, there will be income falling due from time to time. In many instances this will come from corporate bonds and from real estate bonds and mortgages. If there are corporate bonds, in most cases they will be coupon bonds. These should be kept in a safe-deposit box. The individual must therefore go specially to the safe-deposit box to cut coupons, or if the bonds are maturing he must get the bonds themselves to present for payment. He must prepare the ownership certificates called for by the Federal Income Tax Law. He must know or ascertain the status of the bonds as to tax free covenant clauses. With all this before him, how often does he present the coupons on the due date? Remember he has his own private affairs and business to attend to and these are side issues. As a matter of fact, experience shows that the individual, to say the least, is very irregular as to the time of presentation of coupons and even of maturing bonds, and is frequently from one day to a month or more, in extreme cases, behind time. Every day's delay is a loss of interest to the estate of which he is the executor, administrator, trustee, or other fiduciary.

If a bank or a trust company were acting as fiduciary, the coupons or the maturing bonds, as the case might be, would be actually collected on the date due and the money reinvested promptly, so that there would be no lapse of time during which the money was not earning interest, and there would be no delay in making distribution of income if that was the duty of the fiduciary. If one would just consider the loss of interest on, say, a $10,000 bond maturing at a certain date because of the failure to present that bond when due, then one would realize the saving to the estate that results by reason of the fiduciary's acting promptly in such matters.

§ 491. Corporate Fiduciaries for Long Terms

Where a will creates a trust estate, that is to say, where an estate is held for a number of years for the benefit of the widow or the children of the testator, or both, as the case may be, the trustee has duties of considerable responsibility to perform. The executor has, as has already been shown, the duty of administering the estate; that is, of liquidating it, including the collection of al. principal and the turning of it into cash, and the payment of all debts. The executor must then render his final account of proceedings, which is then passed upon by the probate or the surrogate's court having jurisdiction thereof. The decree confirming the account of proceedings as rendered by the executor, and with such amendment as the court shall deem to be proper, will provide for the turning over of the trust funds to the trustee.

The trustee may be the same person as the executor, but the duties of the executor and of the trustee are distinct from each other. What is turned over to the trustee by the executor will be for the most part cash. The trustee then has the duty of investing this cash in accordance with the statutes in regard to trust investments or in accordance with the terms of the will, as the case may be. It should be pointed out that the

statute provides that trust funds shall be invested only in certain securities, eligible for trust funds. What these securities are, however, differs in the different states. In New York the trustee may invest in the same securities that are eligible for investment by savings banks or insurance companies. However, a testator may provide in his will that the trustee is not bound by the statutory limitations with respect to investments, and that he may use his judgment as to what kind of investment he will buy for the estate.

Therefore, the person about to make a will containing any trust provisions should consider the qualifications of the executor and the trustee, especially the latter, with respect to his judgment in making investments and also to his knowledge of what constitutes a legal investment for trust funds and of general market conditions. Probably there are few individuals other than those actually engaged in the buying and selling of securities, who are really familiar with market conditions.

§ 492. Corporate Fiduciaries Are Skilled in Making Investments A bank or a trust company has generally had extended experience in buying securities for investment. Not only is it doing this sort of work for other trusts in which it is acting, but it is buying securities for investment for many of its customers all the time. The bank or the trust company, furthermore, has the very best information obtainable on all conditions with respect to bonds and other securities, and it has the means of obtaining practically any information that is obtainable at all as to the various kinds of securities in which money. may be invested, whether it be securities known as “legal investment for trust funds," or the ordinary bond or the preferred stock of a corporation. Therefore the bank is able to obtain the best possible prices when selling and the lowest prevailing prices when buying.

Furthermore, a bank or a trust company is in a position.

to obtain a knowledge of market conditions not only in the particular vicinity where it is located, but also throughout the world. The larger the institution is, the better its facilities for obtaining this knowledge. For example, some of our larger banks and trust companies have branches in foreign countries. All of the large banks have representatives in foreign countries. Also they have men traveling over all the United States and Canada, whose duty it is to report upon conditions in special localities, so that at all times the bank or the trust company is kept informed as to the present conditions and what they are likely to be. This knowledge is extremely helpful in making investments of trust funds.

§ 493. A Case in Point

There is a New York case in connection with the administration of an estate which would seem worth while considering: A certain man died leaving a widow and a daughter. At the time of his death he was a member of the New York Stock Exchange and also a member of a firm doing business as brokers in Wall Street. The testator directed in his will that his seat on the Stock Exchange should be sold as soon as possible after his death. The testator appointed his partner and his personal attorney as his executors. The partner advised against the immediate sale of the seat on the Stock Exchange, believing that it would increase in value, but instead of increasing in value the reverse occurred. Eventually the widow demanded an accounting and then proceeded to surcharge the accounts of the executors because they had failed to sell the seat on the Stock Exchange as directed by the will. She proved that it would have been possible to sell the membership for a price of about $80,000, whereas at the time of the accounting the price of the membership was $56,000 to $57,000. The surrogate surcharged the account of the executors with the difference betwen $80,000 and $56,000, or