§ 8-1.4 — Supervision of trustees for charitable purposes

New York § 8-1.4

• Jurisdiction: New York
• Law EPT: Estates, Powers & Trusts
• Part 1: Rules Governing Charitable Trusts
• Art. 8: Charitable Trusts

Text

§ 8-1.4 Supervision of trustees for charitable purposes\n (a) For the purposes of this section, "trustee" means (1) any\nindividual, group of individuals, executor, trustee, corporation or\nother legal entity holding and administering property for charitable\npurposes, whether pursuant to any will, trust, other instrument or\nagreement, court appointment, or otherwise pursuant to law, over which\nthe attorney general has enforcement or supervisory powers, (2) any\nnon-profit corporation organized under the laws of this state for\ncharitable purposes and (3) any non-profit foreign corporation organized\nfor charitable purposes, doing business or holding property in this\nstate. Neither a foreign corporation nor a trustee acting under the will\nof, or an agreement executed by, a non-resident of this state shall\nbecome subject to the provisions of this section merely by reason of\nmaintaining a bank, custody, investment or similar account in this\nstate.\n (b) The registration and reporting provisions of this section do not\napply to (1) the United States, any state, territory or possession of\nthe United States, the District of Columbia, the Commonwealth of Puerto\nRico or to any of their agencies or governmental subdivisions, (2) any\ntrustee which is required by any other provision of law to render a\nfull, complete and itemized annual financial report to the congress of\nthe United States or to the legislature of this state, provided that\nsuch report contains the information required of trustees pursuant to\nthis article, (3) corporations organized under the religious\ncorporations law and other religious agencies and organizations, and\ncharities, agencies and organizations operated, supervised or controlled\nby or in connection with a religious organization, (4) educational\ninstitutions incorporated under the education law or by special act, (5)\nany hospital, (6) fraternal, patriotic, veterans, volunteer\nfirefighters, volunteer ambulance workers, social, student or alumni\norganizations and historical societies chartered by the New York state\nboard of regents, (7) a trust for which there is a corporate trustee\nacting as sole trustee or co-trustee under the terms of a will of a\ndecedent who died domiciled in a state other than New York or a trust\ninstrument executed by a non-resident of the state of New York, (8) any\ntrust in which and so long as the charitable interest is deferred or\ncontingent, (9) any person who, in his or her capacity as an officer,\ndirector or trustee of any corporation or organization mentioned in this\nparagraph, holds property for the religious, educational or charitable\npurposes of such corporation or organization so long as such corporation\nor organization is registered with the attorney general pursuant to this\nsection, (10) any cemetery corporation subject to the provisions of\narticle fifteen of the not-for-profit corporation law, (11) the state\nparent teachers association and any parent teachers association\naffiliated with an educational institution that is subject to the\njurisdiction of the state education department, (12) any corporation\norganized under article forty-three of the insurance law. The provisions\nof this subdivision shall apply only to the registration and reporting\nrequirements of this section and shall not limit, impair, change or\nalter any other provision of this article, the not-for-profit\ncorporation law or any other provision of law.\n (c) The attorney general shall establish and maintain a register of\nall trustees containing such information as the attorney general deems\nappropriate, and to that end may conduct such investigations as he or\nshe deems necessary and shall obtain from public records, court\nofficers, taxing authorities, trustees and other sources without the\npayment of any fee or charge, whatever information, copies of\ninstruments, reports and records are needed for the establishment and\nmaintenance of the register.\n (d) Every trustee shall file with the attorney general, within six\nmonths after any property held by him or her or any income therefrom is\nrequired to be applied to charitable purposes, a copy of the instrument\nproviding for his or her title, powers and duties; provided, however,\nthat any trustee currently registered with the department of law\npursuant to article 7-A of the executive law shall be deemed to have\ncomplied with this paragraph. If any property held by a trustee or any\nincome therefrom is required to be applied to charitable purposes at the\ntime this section becomes effective, the filing shall be made within six\nmonths thereafter.\n (e) (1) Whenever any trustee or other person, holding property or any\nincome therefrom, which may be required at any time to be devoted to\ncharitable purposes, shall file in any court in this state (A) any\npetition for instructions relating to the administration or use of such\nproperty or income, (B) any petition for the construction of the\ninstrument under which such property or income is held, (C) any petition\nrespecting the disposition or distribution of such property or income or\n(D) any accounting, due notice of the action or proceeding shall be\nserved by the petitioner upon the attorney general together with a copy\nof any petition, accounting, will or trust instrument.\n (2) Whenever any instrument of a testamentary nature which provides\nfor a disposition for charitable purposes is the subject of (A) an\napplication for denial of probate, (B) objections to probate or (C) an\napplication for approval of a compromise agreement in respect of\nprobate, due notice of the action or proceeding shall be served by the\npetitioner upon the attorney general together with a copy of the\ninstrument and of any such application, objections or agreement.\n (f) (1) Every trustee shall, in addition to filing copies of any\ninstrument required under paragraph (d) of this section, file with the\nattorney general and all identified current charitable beneficiaries\nwritten annual financial reports, under penalties for perjury, on forms\nprescribed by the attorney general, setting forth information as to the\nnature of the assets held for charitable purposes and the administration\nthereof by the trustee, and shall, file with the attorney general and\nall identified current charitable beneficiaries a notice of the\ntermination of the interest of any party in a trust that would cause all\nor part of the trust assets to be applied to charitable purposes or to\nhave the income therefrom so applied, in accordance with rules and\nregulations of the attorney general.\n (2) Trustees required to report to the attorney general under article\n7-A of the executive law shall comply with this paragraph by filing with\nthe attorney general in addition to any other reports required herein,\ncopies of the financial reports required by section 172-b of the\nexecutive law unless such reports have been filed previously.\n (g) Unless the filing of reports is suspended as herein provided, the\nfirst report of any trustee shall be filed no later than six months\nafter the end of the fiscal year of the trustee during which he or she\nbecomes subject to this section.\n (h) The attorney general shall make rules and regulations necessary\nfor the administration of this section, including rules and regulations\nas to the time for filing reports, the contents thereof, and any manner\nof executing and filing them, including but not limited to allowing or\nrequiring any submission to the attorney general to be effected by\nelectronic means and electronic signatures. He or she may classify\ntrusts, estates, corporations and other trustees as to purpose, nature\nof assets, duration, amount of assets, amounts to be devoted to\ncharitable purposes, or otherwise, and may establish different rules for\ndifferent classes as to time and nature of the reports required, to the\nends that he or she shall receive current financial reports as to all\nsuch trusts, estates, corporations or other trustees which will enable\nhim or her to ascertain whether they are being properly administered.\nThe attorney general may suspend the filing of financial reports as to a\nparticular trustee for a reasonable, specifically designated time upon\nwritten application of the trustee, signed under penalties for perjury,\nand filed with the attorney general and after the attorney general has\nfiled in the register of trustees a written statement that the interests\nof the beneficiaries will not be prejudiced thereby and that periodic\nreports during the term of such suspension are not required for proper\nsupervision by his or her office. The filing of the financial reports\nrequired by this section, or the exemption from such filing or the\nsuspension therefrom, shall not have the effect of absolving trustees\nfrom any responsibility for accounting for property or income held by\nthem for charitable purposes. A copy of an account or other financial\nreport filed by a trustee in any court in this state, if the account or\nother financial report substantially complies with the rules and\nregulations of the attorney general, may be filed as a financial report\nunder this section.\n (i) The attorney general may investigate transactions and\nrelationships of trustees for the purpose of determining whether or not\nproperty held for charitable purposes has been and is being properly\nadministered. The attorney general, his or her assistants, deputies or\nsuch other officers as may be designated by him or her, are empowered to\nsubpoena any trustee, agent, fiduciary, beneficiary, institution,\nassociation or corporation or other witness, examine any such witness\nunder oath and, for this purpose, administer the necessary oaths, and\nrequire the production of any books or papers which they deem relevant\nto the inquiry.\n (j) No person shall be excused from attending such inquiry pursuant to\nthe mandate of a subpoena, or from producing a paper or book, or from\nbeing examined or required to answer a question on the ground of failure\nof tender or payment of a witness fee or mileage, unless at the time of\nsuch appearance or production, as the case may be, such witness makes a\ndemand for such payment as a condition precedent to the offering of the\ntestimony or production required by the subpoena and such payment is not\nthereupon made. The provisions for payment of a witness fee or mileage\ndo not apply to any trustee or other person holding funds for charitable\npurposes, or to any person in the employ of any such person, whose\nconduct or practices are being investigated.\n (k) If a person subpoenaed to attend such inquiry fails to obey the\nmandate of a subpoena without reasonable cause, or if a person in\nattendance upon such inquiry shall without reasonable cause refuse to be\nsworn or to be examined or to answer a question or to produce a paper or\nbook when ordered so to do by the officer conducting such inquiry, he or\nshe shall be subject to proceedings under subdivision (b) of section\n2308 of the civil practice law and rules.\n (l) The register, copies of the instruments and the reports filed with\nthe attorney general shall be open to public inspection, subject to\nreasonable rules and regulations adopted by the attorney general, which\nmay include such limitations as to type of information subject to\ninspection or purpose of inspection as the attorney general shall deem\nto be in the public interest. The attorney general shall withhold from\npublic inspection copies of any report filed with any other governmental\nagency of this state or of the United States and required by law to be\nkept confidential by such agency, and shall, upon request of the\ntrustee, withhold from public inspection that portion of any instrument\nfiled which does not relate to charitable purposes and which is not\notherwise of public record.\n (m) The attorney general may institute appropriate proceedings to\nsecure compliance with this section and to secure the proper\nadministration of any trust, corporation or other relationship to which\nthis section applies. The powers and duties of the attorney general\nprovided in this section are in addition to all other powers and duties\nhe or she may have. No court shall modify or terminate the powers and\nresponsibilities of any trust, corporation or other trustee unless the\nattorney general is a party to the proceeding, but nothing in this\nsection shall otherwise impair or restrict the jurisdiction of any court\nwith respect to the matters covered by it. The failure of any trustee to\nregister or to file reports as required by this section may be ground\nfor judicial removal of any person responsible for such failure.\n (n) This section shall apply regardless of any contrary provisions of\nany instrument and shall be liberally construed so as to effectuate its\ngeneral purpose of protecting the public interest in charitable uses,\npurposes and dispositions.\n (o) Every officer, agency, board or commission of this state or\npolitical subdivisions of this state or agencies thereof receiving\napplications for exemption from taxation of any trustee subject to this\nsection shall annually file with the attorney general a list of all\napplications received during the year and shall notify the attorney\ngeneral of any suspension or revocation of a tax exempt status\npreviously granted.\n (p) The attorney general shall collect from each trustee at the time\nof filing of the periodic reports required by this section a fee for the\nfiling of such reports as follows:\n (1) Twenty-five dollars, if the net worth of the property held by such\ntrustee for charitable purposes is less than fifty thousand dollars,\n (2) Fifty dollars if such net worth is fifty thousand dollars or more\nbut less than two hundred and fifty thousand dollars,\n (3) One hundred dollars if such net worth is two hundred and fifty\nthousand dollars or more but less than one million dollars,\n (4) Two hundred fifty dollars if such net worth is one million dollars\nor more but less than ten million dollars,\n (5) Seven hundred and fifty dollars if such net worth is ten million\ndollars or more but less than fifty million dollars, and\n (6) One thousand five hundred dollars if such net worth is fifty\nmillion dollars or more.\n (q) Any trustee shall be exempt from the annual reporting requirements\nof this section by filing each year with the attorney general a verified\nstatement executed by such trustee attesting that during the annual\nreporting period (1) the gross receipts received by said trustee during\nsuch annual reporting period were less than twenty-five thousand dollars\nand that (2) the total assets held by such trustee at no time during\nsuch annual reporting period exceeded twenty-five thousand dollars. For\nthe purposes of this paragraph, gross receipts mean the total received\nduring the financial reporting period of (A) gifts, grants, and\ncontributions; (B) gross income and revenue from all sources; and (C)\ngross amounts from sales of assets, other than inventory; and total\nassets mean the total principal and the accumulated income, if any, held\nby such trustee for purposes of charitable distribution on any day\nduring such annual reporting period.\n (r) A trustee who fails to comply with paragraph (d), (f) or (g) of\nthis section shall, after notice of said failure served upon him or her\nby the attorney general by certified mail, return receipt requested, be\nliable to the state of New York for a fine of ten dollars a day not to\nexceed one thousand dollars for each failure to comply after the\nexpiration of the thirty day period following the receipt of the notice\nfrom the attorney general, except that the time to comply may be\nextended by the attorney general. Where the attorney general, after such\nthirty day period has expired, finds that the failure to comply with\nparagraph (d), (f) or (g) of this section is due to excusable ignorance\nor inadvertence or other reasonable cause, the attorney general shall\nwaive the fine imposed by this paragraph.\n (s) A trustee shall not be qualified to make application for funds or\ngrants or to receive such funds from any department or agency of the\nstate without certifying compliance with paragraphs (d), (f) and (g) of\nthis section and all applicable registration and reporting requirements\nof article seven-A of the executive law.\n