Ky. Rev. Stat. » Chapter 386
Kentucky Revised Statutes

Ky. Rev. Stat. § 386.020 (2026)

Authorized investments of trust funds -- Fiduciary to account for profits --

✓ current as of May 2026
Find cases: SyfertCases citing this section KY-LRCapps.legislature.ky.gov JustiaChapter on Justia CornellLII Search CasesGoogle Scholar

Section not applicable to trustees.

(1) Any fiduciary holding funds for loan or investment may invest them in:

(a) Bonds or other interest-bearing obligations of the federal government;

(b) Bonds, state warrants, and other interest-bearing obligations of this state;

(c) Obligations issued separately or collectively by or for federal land banks, federal intermediate credit banks, and banks for cooperatives under the Act of Congress known as the Farm Credit Act of 1971, 85 Stat. 583, 12 U.S.C. sec. 2001 and amendments thereto;

(d) Notes and bonds secured by mortgage or trust deed insured by the federal housing administrator, obligations issued or insured by the federal housing administrator, and securities issued by national mortgage associations;

(e) Obligations representing loans and advances of credit that are eligible for credit insurance by the federal housing administrator, and the fiduciary may obtain such insurance;

(f) Loans secured by real property or leasehold, that the federal housing administrator insures or makes a commitment to insure, and the fiduciary may obtain such insurance;

(g) Real estate mortgage notes, bonds, and other interest-bearing or dividend- paying securities, including securities of any open-end or closed-end management type investment company or investment trust registered under the Federal Investment Company Act of 1940 or units of common trust funds managed by the fiduciary, which would be regarded by prudent businessmen as a safe investment. The fact that the fiduciary is providing services to the foregoing investment company or trust as investment advisor, custodian, transfer agent, registrar, or otherwise shall not preclude the fiduciary from investing in the securities of such investment or trust;

(h) Real estate, after obtaining the approval of the District Court for such investment;

(i) Life insurance, endowment, and annuity contracts issued by legal reserve companies authorized to do business in this state, after obtaining the approval of the District Court for such investment. Said fiduciary may select any optional settlement provided in a policy maturing by death or as an endowment;

(j) Notes, other interest-bearing obligations, and purchases of participations in such instruments, that are guaranteed in whole or in part by the United States of America or by any agency or instrumentality thereof;

(k) Certificates of deposit and savings accounts of any state or national bank whose deposits are insured by the Federal Deposit Insurance Corporation and whose main office is in this state, including itself, if such fiduciary is a bank. Any portion of such investments that is not insured by the Federal Deposit Insurance Corporation shall be fully secured by:

1. An irrevocable letter of credit issued by the United States of America or by an agency or instrumentality thereof;

2. A pledge of securities named in this subsection as collateral;

3. A surety bond; or

4. A combination of such irrevocable letters of credit, securities, and surety bonds; and

(l) United States government securities or United States government agency securities, the payment of the principal and interest on which the full faith and credit of the United States is pledged, said investments being made under the terms of a repurchase agreement between the fiduciary and any state or national bank whose main office is in this state, including itself, if such fiduciary is a bank.

(2) Fiduciaries holding funds for loan or investment may make loans with the securities named in subsection (1) of this section as collateral.

(3) The fiduciary shall account for all interest or profit received.

(4) This section shall not apply to trustees. Effective: July 15, 2014 History: Amended 2014 Ky. Acts ch. 25, sec. 101, effective July 15, 2014. -- Amended 2002 Ky. Acts ch. 157, sec. 1, effective July 15, 2002. -- Amended 1990 Ky. Acts ch. 450, sec. 1, effective July 13, 1990. -- Amended 1986 Ky. Acts ch. 391, sec. 1, effective July 15, 1986. -- Amended 1980 Ky. Acts ch. 134, sec. 1, effective July 15, 1980. -- Amended 1976 (1st Extra. Sess.) Ky. Acts ch. 14, sec. 325, effective January 1, 1978. -- Amended 1976 Ky. Acts ch. 107, sec. 3. -- Amended 1970 Ky. Acts ch. 267, sec. 1. -- Amended 1962 Ky. Acts ch. 133, sec. 1.-- Amended 1960 Ky. Acts ch. 155, sec. 1. -- Amended 1954 Ky. Acts ch. 52, sec. 1. -- Amended 1950 Ky. Acts ch. 171, sec. 1. -- Amended 1944 Ky. Acts ch. 111, sec. 1. -- Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from Ky. Stat. secs. 4706, 4706a, 4706-6, 4706-7.

Notes of Decisions
Cited in 11 cases (1 in the last 5 years), 1943–2021 · leading case: Fid. & Columbia Trust Co. v. Meek, 171 S.W.2d 41 (Ky. Ct. App. 1943).
Sort: Relevance Newest Treatment
Fid. & Columbia Trust Co. v. Meek, 171 S.W.2d 41 (Ky. Ct. App. 1943). · cites it 2× “Section 386.020 is in part as follows: “(1) Any fiduciary holding funds for loan or investment may invest them in: ‘ ‘ (h) Real estate mortgage notes, bonds and *133 other interest bearing securities which would be regarded by prudent business men as safe investments; # * *” It…”
Jarvis v. Nat'l City, 410 S.W.3d 148 (Ky. 2013). “And while the General Assembly still finds it worthwhile to provide a list of "authorized investments,” see KRS 386.020, trustees have more obligations under the prudent investor standard.”
Collins v. Hudson, 48 S.W.3d 1 (Ky. 2001). “g securities”; the historical setting of the new statute and unreasonable result of a strict and literal construction; and the duty of reconciling or harmonizing the inconsistency with other cognate sections, we think justify the conclusion that it was not intended by the…”
Farmers Bank & Capital Trust Co. v. Hulette, 293 S.W.2d 458 (Ky. Ct. App. 1956). · cites it 2× “Our first question is whether or not KRS 386.020(4) governs the disposition of this cash liquidating distribution.”
Bryan v. Sec. Trust Co., 176 S.W.2d 104 (Ky. Ct. App. 1943). “- It is the appellants’ contention that the initial investment of funds of the several other trust estates in the stock of the Lexington Roller Mills Company was a violation of the demand of undivided loyalty which forbids a trustee dealing with himself and because of its…”
Morris v. Morris, 293 S.W.2d 243 (Ky. Ct. App. 1956). “KRS 386.020 defines the investment area for fiduciaries holding funds for loans, and all the items listed properly fall within the classification of conservative risks, such as government bonds, notes and bonds secured by mortgages that the Federal Housing Administrator has…”
Everett v. Downing, 182 S.W.2d 232 (Ky. Ct. App. 1944). “It'is to be noted that counsel for appellant in his pleading based the right to recover mainly on the ground that appellee occupied the position of de son tort fiduciary or trustee, and this being the status appellee was under the duty to invest the funds in the character of…”
City of Fort Wright, Kentucky v. Bd. of Trs. of the Kentucky Ret. Sys. (Ky. 2021). · cites it 11× “790(1), which in turn incorporates the legal list of permitted fiduciary investments set out in KRS 386.020. Conversely, the Board argues that its statute governing investments, KRS 61.”
Sec. Trust Co. v. Mahoney, 212 S.W.2d 115 (Ky. Ct. App. 1948). · cites it 2× “This rule is found in KRS 386.020(h): “Any fiduciary holding funds for loan or investment may invest them in: # * * (h) Real estate mortgage notes, bonds and other interest-bearing or dividend-paying securities which would be regarded by prudent businessmen as safe investments.”
Plymouth Congregational Church v. Young's Tr., 299 S.W.2d 807 (Ky. Ct. App. 1957). “See also KRS 386.020(4). The church, for ten years, is entitled only to income from the stock.”
Pohlman v. Owensboro Nat'l Bank, 447 S.W.2d 859 (Ky. Ct. App. 1969). · cites it 2× “020(4)] effective June, 1950, it was provided that stock dividends payable at a rate of 10% or more of the corporation’s outstanding shares of the same class *860 were to be deemed corpus of such a trust and not distributable as income.”
— Ky. Rev. Stat. § 386.020(1) — 1 case
City of Fort Wright, Kentucky v. Bd. of Trs. of the Kentucky Ret. Sys. (Ky. 2021). “790(1), which in turn incorporates the legal list of permitted fiduciary investments set out in KRS 386.020. Conversely, the Board argues that its statute governing investments, KRS 61.”
— Ky. Rev. Stat. § 386.020(1)(g) — 1 case
City of Fort Wright, Kentucky v. Bd. of Trs. of the Kentucky Ret. Sys. (Ky. 2021). “790(1), which in turn incorporates the legal list of permitted fiduciary investments set out in KRS 386.020. Conversely, the Board argues that its statute governing investments, KRS 61.”
— Ky. Rev. Stat. § 386.020(1)(h) — 1 case
City of Fort Wright, Kentucky v. Bd. of Trs. of the Kentucky Ret. Sys. (Ky. 2021). “790(1), which in turn incorporates the legal list of permitted fiduciary investments set out in KRS 386.020. Conversely, the Board argues that its statute governing investments, KRS 61.”
— Ky. Rev. Stat. § 386.020(4) — 3 cases
Farmers Bank & Capital Trust Co. v. Hulette, 293 S.W.2d 458 (Ky. Ct. App. 1956). “Our first question is whether or not KRS 386.020(4) governs the disposition of this cash liquidating distribution.”
Plymouth Congregational Church v. Young's Tr., 299 S.W.2d 807 (Ky. Ct. App. 1957). “See also KRS 386.020(4). The church, for ten years, is entitled only to income from the stock.”
Pohlman v. Owensboro Nat'l Bank, 447 S.W.2d 859 (Ky. Ct. App. 1969). “020(4)] effective June, 1950, it was provided that stock dividends payable at a rate of 10% or more of the corporation’s outstanding shares of the same class *860 were to be deemed corpus of such a trust and not distributable as income.”
— Ky. Rev. Stat. § 386.020(h) — 1 case
Sec. Trust Co. v. Mahoney, 212 S.W.2d 115 (Ky. Ct. App. 1948). “This rule is found in KRS 386.020(h): “Any fiduciary holding funds for loan or investment may invest them in: # * * (h) Real estate mortgage notes, bonds and other interest-bearing or dividend-paying securities which would be regarded by prudent businessmen as safe investments.”
Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.