Opinion 25-163

November 6, 2025

Digest:  (1) A full-time judge may not be a voting shareholder of a closely-held family company engaged in manufacturing and selling specialized vehicles to municipalities and other entities, but may continue to hold non-voting shares in the company. 
(2) Under the circumstances, the judge may place voting shares in trust for the benefit of the judge’s children provided that (a) the judge is not a trustee and (b) the judge turns over all authority arising from the voting shares as part of the trust document.

Rules:   Judiciary Law § 212(2)(l); 22 NYCRR 100.2; 100.2(A); 100.4(D)(2); 100.4(D)(3); 100.4(D)(3)(b); Opinions 21-154; 21-22(B); 20-187; 18-169; 13-84.

Opinion:

          The inquiring full-time judge is presently a non-voting shareholder of a closely-held family company engaged in manufacturing and selling specialized vehicles to municipalities and other entities.  The judge anticipates receiving an additional, non-majority allotment of voting shares in the company.  The additional voting shares would permit the judge to participate in the election of directors.  The only other shareholders are family members within the fourth degree of relationship.  The judge asks whether they may continue holding the non-voting shares and, further, whether they may accept the anticipated voting shares.  If they may not accept the voting shares, the judge alternatively asks whether it is permissible to arrange a trust for the voting shares, with the judge’s children as beneficiaries and the trustee independently responsible for voting.

          A judge must always avoid even the appearance of impropriety (see 22 NYCRR 100.2) and must always act in a manner that promotes public confidence in the judiciary’s integrity and impartiality (see 22 NYCRR 100.2[A]).  A full-time judge must not serve as an “officer, director, manager, general partner, advisor, employee or other active participant of any business entity,” unless an exception applies (22 NYCRR 100.4[D][3]).  For example, a full-time judge may “manage and participate in a business entity engaged solely in investment of the financial resources of the judge or members of the judge’s family” (22 NYCRR 100.4[D][3][b]; see also 22 NYCRR 100.4[D][2] [permitting judges to “hold and manage investments of the judge and members of the judge’s family, including real estate”]).

          Here, however, the business entity is not “engaged solely in investment of the financial resources” of the judge and his/her family, nor is it engaged solely in managing their real estate investments (see 22 NYCRR 100.4[D][2]; 100.2[D][3][b]).  To the contrary, this company, though closely held by the judge’s family, is engaged in manufacturing and selling specialized vehicles.

          We have advised that a full-time judge “may not manage, operate, or otherwise actively participate in the [family’s] bar business” (Opinion 21-154; see 22 NYCRR 100.4[D][3]; see also Opinion 13-84 n 2 [full-time judge may “manage and participate in a business entity engaged solely in investment of the financial resources of the judge or members of the judge’s family…, but may not do so where (as here) the entity is involved in other business activities”]).  Where a closely-held company is involved in other business activities, a full-time judge’s association is limited to that of “a strictly passive investor” (Opinion 21-154).

          Accordingly, this judge may continue to hold the non-voting shares because they do not confer powers or duties beyond that of an ordinary “purely passive investor in the company, with no other role” (Opinion 18-169).  However, holding voting shares in this manufacturing company would be ethically impermissible, because such shares confer a new power and duty to elect directors.  This goes beyond a “purely passive” investment, as the voting shareholders help “manage, operate, or otherwise actively participate” a commercial enterprise (Opinions 21-154; 13-84 n 2).

          As for the judge’s alternative proposal, to place the voting shares in trust for his/her children, we note that “[a]t most, the judge may be a strictly passive investor in the [] business, without ‘any active role, title, or function in the management or control of the business’ whatsoever” (Opinion 21-154, quoting Opinion 20-187).  Accordingly, the judge may place voting shares in trust for the benefit of the judge’s children, provided that (a) the judge is not a trustee and (b) the judge turns over the voting rights and/or any other authority arising from the voting shares to the trustee as part of the trust document.  We note that we cannot address any legal questions (see generally Judiciary Law § 212[2][l]).