N.Y. Estates, Powers & Trusts Law § 8-1.4: Supervision of trustees for charitable purposes

§ 8-1.4 Supervision of trustees for charitable purposes

(a) For the purposes of this section, "trustee" means (1) any

individual, group of individuals, executor, trustee, corporation or

other legal entity holding and administering property for charitable

purposes, whether pursuant to any will, trust, other instrument or

agreement, court appointment, or otherwise pursuant to law, over which

the attorney general has enforcement or supervisory powers, (2) any

non-profit corporation organized under the laws of this state for

charitable purposes and (3) any non-profit foreign corporation organized

for charitable purposes, doing business or holding property in this

state. Neither a foreign corporation nor a trustee acting under the will

of, or an agreement executed by, a non-resident of this state shall

become subject to the provisions of this section merely by reason of

maintaining a bank, custody, investment or similar account in this

state.

(b) The registration and reporting provisions of this section do not

apply to (1) the United States, any state, territory or possession of

the United States, the District of Columbia, the Commonwealth of Puerto

Rico or to any of their agencies or governmental subdivisions, (2) any

trustee which is required by any other provision of law to render a

full, complete and itemized annual financial report to the congress of

the United States or to the legislature of this state, provided that

such report contains the information required of trustees pursuant to

this article, (3) corporations organized under the religious

corporations law and other religious agencies and organizations, and

charities, agencies and organizations operated, supervised or controlled

by or in connection with a religious organization, (4) educational

institutions incorporated under the education law or by special act, (5)

any hospital, (6) fraternal, patriotic, veterans, volunteer

firefighters, volunteer ambulance workers, social, student or alumni

organizations and historical societies chartered by the New York state

board of regents, (7) a trust for which there is a corporate trustee

acting as sole trustee or co-trustee under the terms of a will of a

decedent who died domiciled in a state other than New York or a trust

instrument executed by a non-resident of the state of New York, (8) any

trust in which and so long as the charitable interest is deferred or

contingent, (9) any person who, in his or her capacity as an officer,

director or trustee of any corporation or organization mentioned in this

paragraph, holds property for the religious, educational or charitable

purposes of such corporation or organization so long as such corporation

or organization is registered with the attorney general pursuant to this

section, (10) any cemetery corporation subject to the provisions of

article fifteen of the not-for-profit corporation law, (11) the state

parent teachers association and any parent teachers association

affiliated with an educational institution that is subject to the

jurisdiction of the state education department, (12) any corporation

organized under article forty-three of the insurance law. The provisions

of this subdivision shall apply only to the registration and reporting

requirements of this section and shall not limit, impair, change or

alter any other provision of this article, the not-for-profit

corporation law or any other provision of law.

(c) The attorney general shall establish and maintain a register of

all trustees containing such information as the attorney general deems

appropriate, and to that end may conduct such investigations as he or

she deems necessary and shall obtain from public records, court

officers, taxing authorities, trustees and other sources without the

payment of any fee or charge, whatever information, copies of

instruments, reports and records are needed for the establishment and

maintenance of the register.

(d) Every trustee shall file with the attorney general, within six

months after any property held by him or her or any income therefrom is

required to be applied to charitable purposes, a copy of the instrument

providing for his or her title, powers and duties; provided, however,

that any trustee currently registered with the department of law

pursuant to article 7-A of the executive law shall be deemed to have

complied with this paragraph. If any property held by a trustee or any

income therefrom is required to be applied to charitable purposes at the

time this section becomes effective, the filing shall be made within six

months thereafter.

(e) (1) Whenever any trustee or other person, holding property or any

income therefrom, which may be required at any time to be devoted to

charitable purposes, shall file in any court in this state (A) any

petition for instructions relating to the administration or use of such

property or income, (B) any petition for the construction of the

instrument under which such property or income is held, (C) any petition

respecting the disposition or distribution of such property or income or

(D) any accounting, due notice of the action or proceeding shall be

served by the petitioner upon the attorney general together with a copy

of any petition, accounting, will or trust instrument.

(2) Whenever any instrument of a testamentary nature which provides

for a disposition for charitable purposes is the subject of (A) an

application for denial of probate, (B) objections to probate or (C) an

application for approval of a compromise agreement in respect of

probate, due notice of the action or proceeding shall be served by the

petitioner upon the attorney general together with a copy of the

instrument and of any such application, objections or agreement.

(f) (1) Every trustee shall, in addition to filing copies of any

instrument required under paragraph (d) of this section, file with the

attorney general and all identified current charitable beneficiaries

written annual financial reports, under penalties for perjury, on forms

prescribed by the attorney general, setting forth information as to the

nature of the assets held for charitable purposes and the administration

thereof by the trustee, and shall, file with the attorney general and

all identified current charitable beneficiaries a notice of the

termination of the interest of any party in a trust that would cause all

or part of the trust assets to be applied to charitable purposes or to

have the income therefrom so applied, in accordance with rules and

regulations of the attorney general.

(2) Trustees required to report to the attorney general under article

7-A of the executive law shall comply with this paragraph by filing with

the attorney general in addition to any other reports required herein,

copies of the financial reports required by section 172-b of the

executive law unless such reports have been filed previously.

(g) Unless the filing of reports is suspended as herein provided, the

first report of any trustee shall be filed no later than six months

after the end of the fiscal year of the trustee during which he or she

becomes subject to this section.

(h) The attorney general shall make rules and regulations necessary

for the administration of this section, including rules and regulations

as to the time for filing reports, the contents thereof, and any manner

of executing and filing them, including but not limited to allowing or

requiring any submission to the attorney general to be effected by

electronic means and electronic signatures. He or she may classify

trusts, estates, corporations and other trustees as to purpose, nature

of assets, duration, amount of assets, amounts to be devoted to

charitable purposes, or otherwise, and may establish different rules for

different classes as to time and nature of the reports required, to the

ends that he or she shall receive current financial reports as to all

such trusts, estates, corporations or other trustees which will enable

him or her to ascertain whether they are being properly administered.

The attorney general may suspend the filing of financial reports as to a

particular trustee for a reasonable, specifically designated time upon

written application of the trustee, signed under penalties for perjury,

and filed with the attorney general and after the attorney general has

filed in the register of trustees a written statement that the interests

of the beneficiaries will not be prejudiced thereby and that periodic

reports during the term of such suspension are not required for proper

supervision by his or her office. The filing of the financial reports

required by this section, or the exemption from such filing or the

suspension therefrom, shall not have the effect of absolving trustees

from any responsibility for accounting for property or income held by

them for charitable purposes. A copy of an account or other financial

report filed by a trustee in any court in this state, if the account or

other financial report substantially complies with the rules and

regulations of the attorney general, may be filed as a financial report

under this section.

(i) The attorney general may investigate transactions and

relationships of trustees for the purpose of determining whether or not

property held for charitable purposes has been and is being properly

administered. The attorney general, his or her assistants, deputies or

such other officers as may be designated by him or her, are empowered to

subpoena any trustee, agent, fiduciary, beneficiary, institution,

association or corporation or other witness, examine any such witness

under oath and, for this purpose, administer the necessary oaths, and

require the production of any books or papers which they deem relevant

to the inquiry.

(j) No person shall be excused from attending such inquiry pursuant to

the mandate of a subpoena, or from producing a paper or book, or from

being examined or required to answer a question on the ground of failure

of tender or payment of a witness fee or mileage, unless at the time of

such appearance or production, as the case may be, such witness makes a

demand for such payment as a condition precedent to the offering of the

testimony or production required by the subpoena and such payment is not

thereupon made. The provisions for payment of a witness fee or mileage

do not apply to any trustee or other person holding funds for charitable

purposes, or to any person in the employ of any such person, whose

conduct or practices are being investigated.

(k) If a person subpoenaed to attend such inquiry fails to obey the

mandate of a subpoena without reasonable cause, or if a person in

attendance upon such inquiry shall without reasonable cause refuse to be

sworn or to be examined or to answer a question or to produce a paper or

book when ordered so to do by the officer conducting such inquiry, he or

she shall be subject to proceedings under subdivision (b) of section

2308 of the civil practice law and rules.

(l) The register, copies of the instruments and the reports filed with

the attorney general shall be open to public inspection, subject to

reasonable rules and regulations adopted by the attorney general, which

may include such limitations as to type of information subject to

inspection or purpose of inspection as the attorney general shall deem

to be in the public interest. The attorney general shall withhold from

public inspection copies of any report filed with any other governmental

agency of this state or of the United States and required by law to be

kept confidential by such agency, and shall, upon request of the

trustee, withhold from public inspection that portion of any instrument

filed which does not relate to charitable purposes and which is not

otherwise of public record.

(m) The attorney general may institute appropriate proceedings to

secure compliance with this section and to secure the proper

administration of any trust, corporation or other relationship to which

this section applies. The powers and duties of the attorney general

provided in this section are in addition to all other powers and duties

he or she may have. No court shall modify or terminate the powers and

responsibilities of any trust, corporation or other trustee unless the

attorney general is a party to the proceeding, but nothing in this

section shall otherwise impair or restrict the jurisdiction of any court

with respect to the matters covered by it. The failure of any trustee to

register or to file reports as required by this section may be ground

for judicial removal of any person responsible for such failure.

(n) This section shall apply regardless of any contrary provisions of

any instrument and shall be liberally construed so as to effectuate its

general purpose of protecting the public interest in charitable uses,

purposes and dispositions.

(o) Every officer, agency, board or commission of this state or

political subdivisions of this state or agencies thereof receiving

applications for exemption from taxation of any trustee subject to this

section shall annually file with the attorney general a list of all

applications received during the year and shall notify the attorney

general of any suspension or revocation of a tax exempt status

previously granted.

(p) The attorney general shall collect from each trustee at the time

of filing of the periodic reports required by this section a fee for the

filing of such reports as follows:

(1) Twenty-five dollars, if the net worth of the property held by such

trustee for charitable purposes is less than fifty thousand dollars,

(2) Fifty dollars if such net worth is fifty thousand dollars or more

but less than two hundred and fifty thousand dollars,

(3) One hundred dollars if such net worth is two hundred and fifty

thousand dollars or more but less than one million dollars,

(4) Two hundred fifty dollars if such net worth is one million dollars

or more but less than ten million dollars,

(5) Seven hundred and fifty dollars if such net worth is ten million

dollars or more but less than fifty million dollars, and

(6) One thousand five hundred dollars if such net worth is fifty

million dollars or more.

(q) Any trustee shall be exempt from the annual reporting requirements

of this section by filing each year with the attorney general a verified

statement executed by such trustee attesting that during the annual

reporting period (1) the gross receipts received by said trustee during

such annual reporting period were less than twenty-five thousand dollars

and that (2) the total assets held by such trustee at no time during

such annual reporting period exceeded twenty-five thousand dollars. For

the purposes of this paragraph, gross receipts mean the total received

during the financial reporting period of (A) gifts, grants, and

contributions; (B) gross income and revenue from all sources; and (C)

gross amounts from sales of assets, other than inventory; and total

assets mean the total principal and the accumulated income, if any, held

by such trustee for purposes of charitable distribution on any day

during such annual reporting period.

(r) A trustee who fails to comply with paragraph (d), (f) or (g) of

this section shall, after notice of said failure served upon him or her

by the attorney general by certified mail, return receipt requested, be

liable to the state of New York for a fine of ten dollars a day not to

exceed one thousand dollars for each failure to comply after the

expiration of the thirty day period following the receipt of the notice

from the attorney general, except that the time to comply may be

extended by the attorney general. Where the attorney general, after such

thirty day period has expired, finds that the failure to comply with

paragraph (d), (f) or (g) of this section is due to excusable ignorance

or inadvertence or other reasonable cause, the attorney general shall

waive the fine imposed by this paragraph.

(s) A trustee shall not be qualified to make application for funds or

grants or to receive such funds from any department or agency of the

state without certifying compliance with paragraphs (d), (f) and (g) of

this section and all applicable registration and reporting requirements

of article seven-A of the executive law.