Alabama Constitution Section 74 - Authorization of investment of trust funds by executors, trustees, etc., in bonds or stock of private corporations prohibited.
Alabama Constitution – Section 74
Title: Authorization of investment of trust funds by executors, trustees, etc., in bonds or stock of private corporations prohibited.
Text of Section 74:
"The legislature shall not have power to authorize any executor, administrator, guardian, or other trustee, to invest the trust funds in his hands in the bonds or stock of any private corporation; and such use of such trust funds shall be prohibited."
Explanation:
Section 74 of the Alabama Constitution prohibits the state legislature from passing any law that would allow executors, administrators, guardians, or trustees to invest trust funds in the stocks or bonds of private corporations.
Key Points:
Trust fund protection: This section ensures that funds held in trust for beneficiaries are not exposed to the risks associated with private corporate investments.
Fiduciary responsibility: Trustees and similar roles must manage funds conservatively and avoid potentially speculative investments.
Legal restriction: Even if a private investment seems promising, the law strictly forbids such use for trust monies.
Purpose:
To safeguard the interests of those who rely on trust funds—often minors, heirs, or dependents—by avoiding risky or speculative investments in private companies.
RELATED Blog
0 comments