6.2-1005 - (Effective October 1, 2010) Deposit or other use of trust funds. - Virginia Statutes

§ 6.2-1005. (Effective October 1, 2010) Deposit or other use of trust funds.

A. Funds received or held in the trust department of a bank or by a trustcompany awaiting investment or distribution shall not be used by the bank ortrust company in the conduct of its business.

B. Notwithstanding subsection A, such funds may be deposited by a bank in itscommercial or savings department to the credit of its trust department, ifthe bank first delivers to the trust department, as collateral securitytherefor, securities of any of the following classes:

1. Bonds, notes, or certificates of indebtedness of the United States;

2. Other readily marketable securities of the classes in which fiduciariesare authorized or permitted to invest trust funds, as set forth in §26-40.01; or

3. Other readily marketable bonds, notes, or debentures, commonly known asinvestment securities, meeting the following requirements:

a. That the issue be of a sufficiently large total to make marketabilitypossible;

b. Such a public distribution of the securities must have been provided foror made in a manner to protect or insure the marketability of the issue; and

c. That the trust agreement under which the security is issued provides for atrustee independent of the obligor, which trustee must be a trust institution.

C. The securities deposited as collateral pursuant to subsection B shall beowned by the bank and shall at all times be at least equal in market value tothe amount of trust funds so used in the conduct of the business of the bankless such amount thereof as shall be insured by the Federal Deposit InsuranceCorporation under existing or future federal law.

D. In the event of the failure or liquidation of such bank, the owners of thefunds held in trust for investment shall have a lien on the bonds or othersecurities so set apart in addition to their claim against the estate of thebank.

(Code 1950, § 6-99; 1966, c. 584, § 6.1-21; 1992, c. 810; 1993, c. 432; 1994,c. 7; 2010, c. 794.)