72-34-114. Duty to use ordinary skill and prudence. (1) The trustee shall administer the trust with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person would use to accomplish the purposes of the trust as determined from the trust instrument.
     (2) 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.
     (3) A trustee's investment and management decisions respecting individual assets must be evaluated not in isolation but in the context of a trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust.
     (4) Among circumstances that a trustee shall consider in investing and managing trust assets are any of the following that 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 investment decisions or strategies;
     (d) 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;
     (e) the expected total return from income and the appreciation of the 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.
     (5) A trustee shall make a reasonable effort to verify facts relevant to the investment and management of trust assets.
     (6) A trustee may invest in any kind of property or type of investment consistent with the standards of this section.
     (7) The trustor may expand or restrict the standards provided in subsections (1) through (6) by express provisions in the trust instrument. A trustee is not liable to a beneficiary for the trustee's reliance on these express provisions.
     (8) 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.

     History: En. Sec. 89, Ch. 685, L. 1989; amd. Sec. 8, Ch. 290, L. 1999.