Uniform Common Trust Fund Act Law and Legal Definition

The Uniform Common Trust Fund Act and its periodic revisions is a simple enabling statute drafted by the National Conference of Commissioners on Uniform State Laws in 1932 which is suitable for adoption by any state which is willing to permit banks and trust companies to set up one or more common trust funds. A common trust fund is a group of securities set aside by a trustee for investment by two or more trusts operated by the same trustee. It is mostly used by banks and trust companies, and not by individual trustees. The purposes of such a common or joint investment fund are to diversify the investments of the several trusts and thus spread the risk of loss, and to make it easy to invest any amount of trust funds quickly and with a small amount of trouble.

The Uniform Act does not set out in detail the restrictions on the operation of such common trust funds, except that they must be composed of investments legal for trusts in that state. The details on the restrictions on the operation of common trust funds are covered by the regulations issued by the Federal Reserve Board which went into effect December 31, 1937. The Act was amended in 1952.