CEMETERIES ‑- ENDOWMENT CARE FUND ‑- INVESTMENTS.
Endowment Care fund of cemetery cannot be invested in graves, which are not income‑producing.
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February 23, 1955
Honorable C. S. Harley
The Cemetery Board
11,111 Aurora Avenue
Seattle 33, Washington Cite as: AGO 55-57 No. 30
By letter as previously acknowledged you have requested the opinion of this office upon the question of whether or not an investment of an endowment care fund in graves owned by the cemetery is proper.
You state the facts as follows:
"It was noted that one cemetery operating in this state reports that it is holding 186 graves for $100 each, a total of $18,600 as a security or investment of its endowment care fund, which is reported to us to be $61,400."
By long-distance telephone conversation of February 18, 1955, you further advised that you did not know the exact status of the investment of the care endowment fund, but suspected that the situation is that there is a shortage in the fund and that the title to 186 graves has been transferred to the fund for the purpose of covering up the shortage. Since it is uncertain as to just what the status of the fund is we can give only a general opinion that the investment of even $18,600 in the graves, or, on the other hand, a transfer of title of the 186 graves to cover up a shortage in the endowment would be illegal.
[[Orig. Op. Page 2]]
RCW 68.44.020 (1953 Supp.) provides in substance that the principal of the endowment care funds shall be irreducible and that the income from such funds shall be used for the endowment care stipulated in the instrument by which the fund was established. Thus, it appears that any investment of the endowment care funds would have to be made in some type of securities that produced income. There is nothing in the facts submitted to us to indicate that income would be derived from an investment of $18,600 in graves of the cemetery involved.
On the other hand, it appears to us that such investment might be highly speculative and not such as an ordinarily careful and prudent business man would make in investing his own funds.
RCW 68.44.030 (1953 Supp.) provides:
"Endowment care funds shall be kept invested in accordance with the provisions of RCW 30.24.020."
The latter section reads as follows:
"In acquiring, investing, reinvesting, exchanging, selling and managing property for the benefit of another, a fiduciary shall exercise the judgment and care under the circumstances then prevailing, which men 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 their capital. Within the limitations of the foregoing standard, and subject to any express provisions or limitations contained in any particular trust instrument, [[Orig. Op. Page 3]] a fiduciary is authorized to acquire and retain every kind of property, real, personal or mixed, and every kind of investment specifically including but not by way of limitation, debentures and other corporate obligations, and stocks, preferred or common, which men of prudence, discretion and intelligence acquire for their own account."
This statute has been interpreted, approved and followed by our supreme court in Monroe v. Winn, 16 Wn. (2d) 497, 133 P. (2d) 952; and In re Parks Trust, 39 Wn. (2d) 763, 238 P. (2d) 1205.
In conclusion it is our opinion that the cemetery board should request an audit of the endowment care fund involved at the earliest possible date. If it is found from such audit that there is a shortage in the endowment care fund, steps should be taken immediately to have the situation corrected. If it is determined that endowment care funds in the amount of $18,600 or any other amount has been invested in graves of the cemetery, immediate steps should be taken to correct this situation and further, to see that the funds are recovered and properly invested in accordance with the law.
Very truly yours,
ROY C. FOX
Assistant Attorney General