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This entry was published on 2014-09-22
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Supervision of trustees for charitable purposes
Estates, Powers & Trusts (EPT) CHAPTER 17-B, ARTICLE 8, PART 1
§ 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

(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.