Satisfaction of prudent investor standard; evaluation of decisions; consideration of circumstances; verification of facts; types of investments; special skills or expertise of trustee.
1. A trustee shall invest and manage trust property as a prudent investor would, considering the terms, purposes, requirements for distribution, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill and caution.
2. A trustee’s decisions concerning investment and management as applied to individual assets must be evaluated not in isolation but in the context of the trust portfolio as a whole and as part of an overall strategy of investment having objectives for risk and return reasonably suited to the trust.
3. Among circumstances that a trustee shall consider in investing and managing trust property are such of the following as are relevant to the trust or its beneficiaries:
(a) General economic conditions;
(b) The possible effect of inflation or deflation;
(c) The expected tax consequences of decisions or strategies;
(d) The role that each investment or course of action plays within the overall trust portfolio;
(e) The expected total return from income and the appreciation of capital;
(f) Other resources of the beneficiaries;
(g) Needs for liquidity, regularity of income, and preservation or appreciation of capital; and
(h) An asset’s special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries.
4. A trustee shall make a reasonable effort to verify facts relevant to the investment and management of trust property.
5. A trustee may invest in any kind of property or type of investment consistent with the standards of NRS 164.700 to 164.775, inclusive, which may include financial assets, interests in closely held enterprises, tangible and intangible personal property, and real property.
6. A trustee who has special skills or expertise, or is named trustee in reliance upon his representation that he has special skills or expertise, has a duty to use those special skills or expertise.
Last modified: February 25, 2006