(a) A trustee shall diversify the investments of the trust:
Terms Used In Tennessee Code 35-14-105
Contract: A legal written agreement that becomes binding when signed.
Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
Fiduciary: A trustee, executor, or administrator.
Governing instrument: means :(A) A will, deed, trust instrument or agency agreement. See Tennessee Code 35-14-102
Grantor: The person who establishes a trust and places property into it.
Savings and loan association: includes a building and loan association, a federal or state savings and loan association, a federal savings bank, and any other financial institution, the accounts of which are insured by the [former] federal savings and loan insurance corporation (FSLIC) or any successor [repealed] of such corporation. See Tennessee Code 1-3-105
Trust: means any fiduciary relationship created by a governing instrument. See Tennessee Code 35-14-102
Trustee: A person or institution holding and administering property in trust.
Trustor: The person who makes or creates a trust. Also known as the grantor or settlor.
United States: includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
(1) Unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying, or(2) Except as otherwise provided in subsection (b).(b)(1) In the absence of express provisions to the contrary in the governing instrument, a fiduciary may without liability continue to hold property received into a trust at its inception or subsequently added to it or acquired pursuant to proper authority if and as long as the fiduciary, in the exercise of good faith and reasonable prudence, discretion and intelligence, may consider that retention is in the best interest of the trust and its beneficiaries or in furtherance of the goals of the trustor as determined from that instrument. Such property may include capital stock in the corporate fiduciary and stock in any corporation controlling, controlled by or under common control with such fiduciary; and the fiduciary may acquire additional shares of such stock by stock dividends, stock splits, exchanges and conversions for other stock or debentures and exercise of rights to acquire stock of the corporation or another corporation acquiring the stock of the corporation by merger, consolidation or reorganization.(2) In the absence of express provisions to the contrary in the governing instrument, a deposit of trust funds at interest in any bank, savings and loan association or other financial institution (including the fiduciary and an affiliated depository institution) shall be a qualified investment to the extent that such deposit is insured under any present or future law of the United States. The fiduciary may also hold deposits in such institutions without interest in reasonable amounts and for reasonable times for operating expenses, anticipated distributions and pending investments.(c)(1) Notwithstanding any other provision of this chapter to the contrary, and except as otherwise provided in the governing instrument, the duties of a trustee regarding the acquisition, retention or ownership of a contract of insurance on the life of the grantor of the trust, or on the lives of the grantor and the grantor’s spouse, children, grandchildren, or parents, do not include a duty to:
(A) Determine whether any contract of life insurance in the trust, or to be acquired by the trust, is or remains a proper investment;
(i) As to the type of insurance contract;(ii) As to the quality of the insurance company;(iii) Or otherwise;(B) Diversify the investment; or(C) Exercise any policy options, rights, or privileges available under any contract of life insurance in the trust, including any right to borrow the cash value or reserve of the policy, acquire a paid-up policy, or convert to a different policy.(2) The trustee is not liable to the beneficiaries of the contract of insurance or to any other party for loss arising from the absence of these duties regarding insurance contracts under this subsection (c).
