2009 California Probate Code - Section 16045-16054 :: Article 2.5. Uniform Prudent Investor Act

PROBATE CODE
SECTION 16045-16054

16045.  This article, together with subdivision (a) of Section 16002
and Section 16003, constitutes the prudent investor rule and may be
cited as the Uniform Prudent Investor Act.

16046.  (a) Except as provided in subdivision (b), a trustee who
invests and manages trust assets owes a duty to the beneficiaries of
the trust to comply with the prudent investor rule.
   (b) The settlor may expand or restrict the prudent investor rule
by express provisions in the trust instrument. A trustee is not
liable to a beneficiary for the trustee's good faith reliance on
these express provisions.

16047.  (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 and courses of action 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 are appropriate to consider in
investing and managing trust assets are the following, to the extent
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.
   (5) The expected total return from income and the appreciation of
capital.
   (6) Other resources of the beneficiaries known to the trustee as
determined from information provided by 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 or more of the beneficiaries.
   (d) A trustee shall make a reasonable effort to ascertain facts
relevant to the investment and management of trust assets.
   (e) A trustee may invest in any kind of property or type of
investment or engage in any course of action or investment strategy
consistent with the standards of this chapter.

16048.  In making and implementing investment decisions, the trustee
has a duty to diversify the investments of the trust unless, under
the circumstances, it is prudent not to do so.

16049.  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
chapter.

16050.  In investing and managing trust assets, a trustee may only
incur costs that are appropriate and reasonable in relation to the
assets, overall investment strategy, purposes, and other
circumstances of the trust.

16051.  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 and not by hindsight.

16052.  (a) A trustee may delegate investment and management
functions as prudent under the circumstances. The trustee shall
exercise prudence in the following:
   (1) Selecting an agent.
   (2) Establishing the scope and terms of the delegation, consistent
with the purposes and terms of the trust.
   (3) Periodically reviewing the agent's overall performance and
compliance with the terms of the delegation.
   (b) In performing a delegated function, an agent has a duty to
exercise reasonable care to comply with the terms of the delegation.
   (c) Except as otherwise provided in Section 16401, a trustee who
complies with the requirements of subdivision (a) is not liable to
the beneficiaries or to the trust for the decisions or actions of the
agent to whom the function was delegated.
   (d) By accepting the delegation of a trust function from the
trustee of a trust that is subject to the law of this state, an agent
submits to the jurisdiction of the courts of this state.

16053.  The following terms or comparable language in the provisions
of a trust, unless otherwise limited or modified, authorizes any
investment or strategy permitted under this chapter: "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."

16054.  This article applies to trusts existing on and created after
its effective date. As applied to trusts existing on its effective
date, this article governs only decisions or actions occurring after
that date.


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