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59-17 Prudent Investor Standards

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CHAPTER 59-17PRUDENT INVESTOR STANDARDS59-17-01. Prudent investor rule.1.Except as otherwise provided in subsection 2, a trustee who invests and manages<br>trust assets owes a duty to the beneficiaries of the trust to comply with the prudent<br>investor rule set forth in sections 59-16-02, 59-16-03, 59-16-05, 59-16-06, and<br>59-16-07 and in this chapter.2.The prudent investor rule, a default rule, may be expanded, restricted, eliminated, or<br>otherwise altered by the provisions of a trust. A trustee is not liable to a beneficiary<br>to the extent that the trustee acted in reasonable reliance on the provisions of the<br>trust.59-17-02. Standard of care - Portfolio strategy - Risk and return objectives.1.A trustee shall invest and manage trust assets as a prudent investor would, by<br>considering the purposes, terms, distribution requirements, and other circumstances<br>of the trust. In satisfying this standard, the trustee shall exercise reasonable care,<br>skill, and caution.2.A trustee's investment and management decisions respecting individual assets must<br>be evaluated not in isolation but in the context of the trust portfolio as a whole and as<br>a part of an overall investment strategy having risk and return objectives reasonably<br>suited to the trust.3.Among circumstances a trustee shall consider in investing and managing trust<br>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<br>portfolio, which may include financial assets, interests in closely held<br>enterprises, tangible and intangible personal property, and real property;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<br>capital; andh.An asset's special relationship or special value, if any, to the purposes of the<br>trust or to one or more of the beneficiaries.4.A trustee shall make a reasonable effort to verify facts relevant to the investment<br>and management of trust assets.5.A trustee may invest in any kind of property or type of investment consistent with the<br>standards of this title.59-17-03. Diversification. A trustee shall diversify the investments of the trust unlessthe trustee reasonably determines that, because of special circumstances, the purposes of the<br>trust are better served without diversifying.Page No. 159-17-04. Duties at inception of trusteeship. Within a reasonable time after acceptinga trusteeship or receiving trust assets, a trustee shall review the trust assets and make and<br>implement decisions concerning the retention and disposition of assets, in order to bring the trust<br>portfolio into compliance with the purposes, terms, distribution requirements, and other<br>circumstances of the trust and with the requirements of this chapter.59-17-05.Reviewing compliance.Compliance with the prudent investor rule isdetermined in light of the facts and circumstances existing at the time of a trustee's decision or<br>action and not by hindsight.59-17-06. Language invoking standard. The following terms or comparable languagein the provisions of a trust, unless otherwise limited or modified, authorizes any investment or<br>strategy permitted under this chapter: investments permissible by law for investment of trust<br>funds, legal investments, authorized investments, using the judgment and care under the<br>circumstances then prevailing that persons of prudence, discretion, and intelligence exercise in<br>the management of their own affairs, not in regard to speculation but in regard to the permanent<br>disposition of their funds, considering the probable income as well as the probable safety of their<br>capital, prudent man rule, prudent trustee rule, prudent person rule, and prudent investor rule.Page No. 2Document Outlinechapter 59-17 prudent investor standards