You asked us to research, for the eight states in the Atlanta Region, the laws concerning
a representative payee's responsibilities for conserving and investing benefit payments.
The specific questions concern the types of investments considered appropriate; whether
parent-payees are permitted to invest differently than other types of payees; and
what rules are followed by trustees. Our responses to the questions, by state, are
What types of investments are considered appropriate under the "prudent man" rule?
The Georgia Code formerly had a "prudent person" rule which allowed an "executor or
trustee" to "acquire and retain every kind of property and every kind of investment,"
Ga. Code Ann. 53-8-2(b)-(c) (1997); however, this statutory section was revised, effective January
1, 1998. See 1996 Ga. Laws, p. 504, § 10, amended by 1998 Ga. Laws, p. 1586, § 41. The official
Comment to section 53-8-1 of The Revised Probate Code of 1998 notes that this section
applies to all personal representatives, whereas the former Code section applied only
to executors. The revised Code now states that when making any investments and acquiring
and managing property and investments, a "personal representative"
shall exercise the judgment and care, under the circumstances then prevailing, which
persons of prudence, discretion, and intelligence exercise in the management of their
own affairs, not in regard to speculation but in regard to the permanent disposition
of their funds, considering the probable income as well as the probable safety of
Ga. Code Ann. § 53-8-1(b) (1998). Within the limitations of the above standard,
a personal representative is authorized to acquire and retain every kind of property
whether real, personal, or mixed, and every kind of investment, specifically including,
but not by way of limitation, bonds, debentures, and other corporate obligations and
stocks, preferred or common…."
Ga. Code Ann. § 53-8-1(c) (1998). A personal representative is authorized to invest estate funds
in real property after first obtaining an order to that effect from the probate court
or from the superior court. See Ga. Code. Ann. § 53-8-2 (1998). A personal representative is authorized to make the following specific
(1) Bonds issued by any county or municipality of this state which have been validated
as required by law for the validation of county and municipal bonds;
(2) Bonds issued by any county board of education under Subpart 1 of Part 3 of Article
9 of Chapter 2 of Title 20 for the purpose of building and equipping schoolhouses,
which bonds have been validated and confirmed as required under Part 1 of Article
2 of Chapter 82 of Title 36;
(3) Bonds and other securities issued by this state or by the Board of Regents of
the University System of Georgia;
(4) Bonds or other obligations issued by the United States government and bonds of
any corporation created by an act of Congress, the bonds of which are guaranteed by
the United States government as provided in Code Section 53-8-4; and
(5) Interest-bearing deposits in any chartered state or national bank or trust company
or savings and loan association located in this state to the extent the deposits are
insured by the Federal Deposit Insurance Corporation or comparable insurance.
Ga. Code. Ann. § 53-8-3 (1998). A personal representative is also authorized to invest funds in
"direct and general obligations of the United States government, obligations unconditionally
guaranteed by the United States government, or obligations of the agencies of the
United States government…." Ga. Code. Ann. § 53-8-4(a) (1998). The personal representative may invest in and hold obligations
either directly or in the form of securities or other interests in any open-end or
closed-end management type investment company or investment trust registered under
the Investment Company Act of 1940, so long as:
(1) The portfolio of such investment company or investment trust is limited to such
obligations and repurchase agreements fully collateralized by such obligations;
(2) Such investment company or investment trust takes delivery of such collateral
either directly or through an authorized custodian; and
(3) Such investment company or investment trust is operated so as to provide a constant
net asset value or price per share.
Id.; see also Citizens and Southern Nat. Bank v. Haskins, 254 Ga. 131, 327 S.E.2d 192 (Ga. 1985); Perling v. Citizens and Southern Nat. Bank, 250 Ga. 674, 300 S.E.2d 649 (Ga. 1983); Simpson v. Brand, 108 Ga.App. 393, 133 S.E.2d 393 (Ga.App., Sep. 04, 1963).
Under state law, are parent-payees permitted to invest the funds belonging to their
minor children differently than other types of payees?
We found no special provisions for parents of minor children.
What are the rules followed by trustees regarding the investment of funds with which
they are entrusted?
The Georgia Code identifies appropriate investments for trust funds. See Ga. Code. Ann. § 53-12-280 (1998). This statute essentially provides that investments can be made
in state bonds and securities and in obligations guaranteed by the U.S. government
or obligations issued by federal agencies. The specific provisions follows:
Authorized investments of trust funds; interest; other investments.
Any trustee holding trust funds may invest the same in bonds or other securities issued
by this state, making a true return of the price paid and time of purchase. The investments
shall be free from taxation as long as they are held for the trust estate. Trustees
are also authorized to invest trust funds in direct and general obligations of the
United States government, obligations unconditionally guaranteed by the United States
government, or obligations of agencies of the United States government issued by the
Federal Land Bank, Federal Home Loan Bank, Federal Intermediate Credit Bank, and Central
Bank for Cooperatives. No person, firm, corporation, or association shall be liable
to account for a greater rate of interest than the amount actually received on the
investment. Any other investments of trust funds shall be made under an order of the
superior court or shall be at the risk of the trustee. Deposits of funds at interest
in any chartered state or national bank or trust company located in this state and
insured by the Federal Deposit Insurance Corporation shall be deemed investments;
and the deposits are authorized as legal investments, to the extent that the deposits
are insured by the Federal Deposit Insurance Corporation, without any order or authority
from any court.
Ga. Code. Ann. § 53-12-280 (1998).
Each of the states within the Atlanta Region provides significant discretion to fiduciaries
making decisions regarding investments. Although each state may have a slightly different
definition of "prudent" man or person, only Georgia and Kentucky specifically delineate
what investments are acceptable, Alabama and Mississippi allow great latitude in what
investments are appropriate, and Florida, Georgia, North Carolina, South Carolina,
and Tennessee allow for investment of every kind and in every kind of property.