2005 Texas Property Code CHAPTER 117. UNIFORM PRUDENT INVESTOR ACT

PROPERTY CODE

CHAPTER 117. UNIFORM PRUDENT INVESTOR ACT


	§ 117.001. SHORT TITLE.  This chapter may be cited as the 
"Uniform Prudent Investor Act."

Added by Acts 2003, 78th Leg., ch. 1103, § 1, eff. Jan. 1, 2004.           


	§ 117.002. UNIFORMITY OF APPLICATION AND 
CONSTRUCTION.  This chapter shall be applied and construed to 
effectuate its general purpose to make uniform the law with respect 
to the subject of this chapter among the states enacting it.

Added by Acts 2003, 78th Leg., ch. 1103, § 1, eff. Jan. 1, 2004.           


	§ 117.003. PRUDENT INVESTOR RULE.  (a) Except as 
otherwise provided in Subsection (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 set forth in this chapter.
	(b)  The prudent investor rule, a default rule, may be 
expanded, restricted, eliminated, or otherwise altered by the 
provisions of a trust.  A trustee is not liable to a beneficiary to 
the extent that the trustee acted in reasonable reliance on the 
provisions of the trust.

Added by Acts 2003, 78th Leg., ch. 1103, § 1, eff. Jan. 1, 2004.           


	§ 117.004. 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 circumstances that a trustee shall consider in 
investing and managing trust assets are such of the following as 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;  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 make a reasonable effort to verify facts 
relevant to the investment and management of trust assets.
	(e)  Except as otherwise provided by and subject to this 
subtitle, 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 those 
special skills or expertise.

Added by Acts 2003, 78th Leg., ch. 1103, § 1, eff. Jan. 1, 2004.           


	§ 117.005. 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.

Added by Acts 2003, 78th Leg., ch. 1103, § 1, eff. Jan. 1, 2004.           


	§ 117.006. 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 
chapter.

Added by Acts 2003, 78th Leg., ch. 1103, § 1, eff. Jan. 1, 2004.           


	§ 117.007. LOYALTY.  A trustee shall invest and manage 
the trust assets solely in the interest of the beneficiaries.

Added by Acts 2003, 78th Leg., ch. 1103, § 1, eff. Jan. 1, 2004.           


	§ 117.008. IMPARTIALITY.  If a trust has two or more 
beneficiaries, the trustee shall act impartially in investing and 
managing the trust assets, taking into account any differing 
interests of the beneficiaries.

Added by Acts 2003, 78th Leg., ch. 1103, § 1, eff. Jan. 1, 2004.           


	§ 117.009. INVESTMENT COSTS.  In investing and managing 
trust assets, a trustee may only incur costs that are appropriate 
and reasonable in relation to the assets, the purposes of the trust, 
and the skills of the trustee.

Added by Acts 2003, 78th Leg., ch. 1103, § 1, eff. Jan. 1, 2004.           


	§ 117.010. REVIEWING COMPLIANCE.  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.

Added by Acts 2003, 78th Leg., ch. 1103, § 1, eff. Jan. 1, 2004.           


	§ 117.011. DELEGATION OF INVESTMENT AND MANAGEMENT 
FUNCTIONS.  (a) A trustee may delegate investment and management 
functions that a prudent trustee of comparable skills could 
properly delegate under the circumstances.  The trustee shall 
exercise reasonable care, skill, and caution in:
		(1)  selecting an agent;                                                      
		(2)  establishing the scope and terms of the 
delegation, consistent with the purposes and terms of the trust;  
and
		(3)  periodically reviewing the agent's actions in 
order to monitor the agent's performance and compliance with the 
terms of the delegation.
	(b)  In performing a delegated function, an agent owes a duty 
to the trust to exercise reasonable care to comply with the terms of 
the delegation. 
	(c)  A trustee who complies with the requirements of 
Subsection (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, unless:
		(1)  the agent is an affiliate of the trustee;  or                            
		(2)  under the terms of the delegation:                                       
			(A)  the trustee or a beneficiary of the trust is 
required to arbitrate disputes with the agent;  or
			(B)  the period for bringing an action by the 
trustee or a beneficiary of the trust with respect to an agent's 
actions is shortened from that which is applicable to trustees 
under the law of this state.
	(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.

Added by Acts 2003, 78th Leg., ch. 1103, § 1, eff. Jan. 1, 2004.           


	§ 117.012. LANGUAGE INVOKING STANDARD OF CHAPTER.  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."

Added by Acts 2003, 78th Leg., ch. 1103, § 1, eff. Jan. 1, 2004.