§ 19–1309.01. Prudent investor rule.
(a) Except as provided in subsection (b) of this section, a trustee who invests and manages trust assets owes a duty to the beneficiaries of the trust to comply with the prudent investor rule as set forth in sections 19-1309.02 through 19-1309.09.
(b) The prudent investor rule is a default rule that may be expanded, restricted, eliminated, or otherwise altered by provisions of the trust. A trustee is not liable to a beneficiary to the extent that the trustee acted in reasonable reliance on provisions of the trust.
2001 Ed., § 28-4701.
1981 Ed., § 28-4701.
Uniform Law: This section is based upon § 1 of the Uniform Prudent Investor Act.
§ 19–1309.02. Standard of care; portfolio strategy; risk and return objectives.
(a) A trustee shall invest and manage trust assets as a prudent investor would by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.
(b) A trustee’s investment and management decisions respecting individual assets must be evaluated not in isolation, but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust.
(c) Among the circumstances relevant to the trust or its beneficiaries that a trustee shall consider in investing and managing the trust assets are the following:
(1) General economic conditions;
(2) The possible effect of inflation or deflation;
(3) The expected tax consequences of investment decisions or strategies;
(4) The role that each investment or course of action plays within the overall trust portfolio, which may include financial assets, interests in closely held enterprises, tangible and intangible personal property, and real property;
(5) The expected total return from income and the appreciation of capital;
(6) Other resources of the beneficiaries;
(7) Needs for liquidity, for regularity of income, and for preservation or appreciation of capital; and
(8) An asset’s special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries.
(d) A trustee shall take reasonable steps to verify facts relevant to the investment and management of trust assets.
(e) Subject to the standards of this subchapter, a trustee may invest in any kind of property or type of investment.
2001 Ed., § 28-4702.
1981 Ed., § 28-4702.
This section is referenced in § 19-1309.01.
Uniform Law: This section is based upon § 2 of the Uniform Prudent Investor Act.
§ 19–1309.03. Diversification.
A trustee shall diversify the investments of the trust unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying.
2001 Ed., § 28-4703.
1981 Ed., § 28-4703.
Uniform Law: This section is based upon § 3 of the Uniform Prudent Investor Act.
§ 19–1309.04. Duties at inception of trusteeship.
Within a reasonable time after accepting a trusteeship or receiving trust assets, a trustee shall review the trust assets and make and implement decisions concerning the retention and disposition of assets in order to bring the trust portfolio into compliance with the purposes, terms, distribution requirements, and other circumstances of the trust, and with the requirements of this subchapter.
2001 Ed., § 28-4704.
1981 Ed., § 28-4704.
Uniform Law: This section is based upon § 4 of the Uniform Prudent Investor Act.
§ 19–1309.05. Reviewing compliance.
The prudent investor rule expresses a standard of conduct, not a particular outcome. Compliance with the prudent investor rule is determined in light of the facts and circumstances existing at the time of a trustee’s decision or action.
§ 19–1309.06. Language invoking standard of subchapter.
The following terms or comparable language in a trust instrument, unless otherwise limited or modified by the instrument, authorizes any investment or strategy permitted under this subchapter: “investments permissible by law for investment of trust funds”, “legal investments”, “authorized investments”, “using the judgment and care under the circumstances then prevailing that persons 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”, “prudent man rule”, “prudent trustee rule”, “prudent person rule”, and “prudent investor rule”.