Prudent investor rule
Sec. 2. (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 circumstances that a trustee shall consider in investing
and managing trust assets are those of the following that are relevant
to the trust or its beneficiaries:
(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, regularity of income, and preservation
or appreciation of capital.
(8) An asset's special relationship or special value, if any, to the
purposes of the trust or to one (1) or more of the beneficiaries.
(d) A trustee shall make a reasonable effort to verify facts relevant
to the investment and management of trust assets.
(e) A trustee may invest in any kind of property or type of
investment consistent with the standards of this chapter.
(f) A trustee who has special skills or expertise, or is named
trustee in reliance upon the trustee's representation that the trustee
has special skills or expertise, has a duty to use the special skills or
expertise.
As added by P.L.137-1999, SEC.3.
Last modified: May 27, 2006