Sec. 13. Every guardian shall invest the surplus funds of the estate of the protected person, in which investment the guardian has no interest, and only as provided in this section:

(1) In bonds or notes constituting the direct and general obligations of the United States, or of a state that has not at any time during the ten (10) years next preceding the date of the investment defaulted in payment of the principal or interest on any bonds or notes by it issued, or in bonds, the payment of which, both principal and interest, is guaranteed by the United States.

(2) In bonds or notes that are the direct and general legal obligations of a county, city, or town in this state, and which also at the date of the investment has the power to levy general taxes sufficient for the payment of principal and interest on the obligations, if the issuer of the obligation has not defaulted in payment of principal or interest due upon any of its bonds or notes at any time during the ten (10) years next preceding the date of the investment.

(3) After prior order of the court, upon application, in the legally issued notes or bonds of the owner of improved unencumbered real property in this state, secured by first mortgage or deed of trust. The total debt secured by the encumbrance may not exceed fifty percent (50%) of the cash market value of the real property at the time of the investment, and, if buildings or other improvements constitute a material part of the value of the premises encumbered to secure the indebtedness, they shall be kept insured against loss or damage by fire, in a reasonable amount for the benefit of the owners of the notes or bonds. Before making any investment, a signed application shall be procured from the borrower, that shall contain the information required by the lender, and that shall contain a complete description of the real estate, including improvements and an affirmative statement that the proposed borrower is the owner of the entire fee simple title to the real estate and improvements, that they are free of every encumbrance or lien of any character, or if not, a statement of any existing encumbrance or other liens, and specific authorization to the lender to withhold from the proposed loan the necessary sum to discharge and procure the release of any encumbrances or other liens. The release shall be procured and filed for record prior to or contemporaneously with the making of the loan. The proposed borrower shall also furnish with the application an abstract or certificate of title, which shall be completed to the time of closing the loan. The guardian proposing to make a loan or purchase any notes or bonds shall exhibit to the court with the application for approval the opinion of a qualified attorney at law, satisfactory to the court, which opinion shall show that the attorney has examined the title or certificate of title and that it is the opinion of the attorney that the proposed borrower has good title to the property to be encumbered, and that the proposed encumbrance will constitute a first lien on the property. In addition, the guardian shall file with the court satisfactory written evidence that the cash market value of the property to be encumbered is in accordance with the requirements of this subsection. If the guardian purchases notes or bonds previously issued, the attorney's examination and opinion shall also disclose whether the proposed transferor has and will pass to the guardian good title together with the liens securing the notes or bonds. Except loans insured by the federal housing administrator, the guardian is not authorized to loan or invest money upon the security of a real estate mortgage or trust deed which secures any principal indebtedness other than to the protected person's estate, and in the case of a minor the maturity of any indebtedness to the minor secured by real estate mortgage or trust deed shall not be later than the date on which the minor will attain the age of majority. Any investment made by a guardian in any of the securities enumerated shall not be transferred, liquidated, or disposed of, except upon petition filed for that purpose and an order of court obtained.

(4) In shares of a federal savings and loan association organized under the Home Owners' Loan Act of 1933, (12 U.S.C. 1461 through 1468), as in effect on December 31, 1990, or any building or savings and loan association whose principal place of business is located in Indiana whose accounts are insured by the Federal Deposit Insurance Corporation as provided in 12 U.S.C. 1811 through 1833e, as in effect on December 31, 1990. No shares may be purchased in excess of the amount of insurance protection afforded a member or investor of any such institution.

(5) In savings deposits in any bank whose principal place of business is located in Indiana.

Formerly: Acts 1953, c.112, s.2013; Acts 1957, c.223, s.1. As amended by Acts 1982, P.L.1, SEC.53; P.L.33-1989, SEC.48; P.L.8-1991, SEC.32.