26-45.4 - Standard of care; portfolio strategy; risk and return objectives.
§ 26-45.4. Standard of care; portfolio strategy; risk and return objectives.
A. A trustee shall invest and manage trust assets as a prudent investorwould, by considering the purposes, terms, distribution requirements, andother circumstances of the trust. In satisfying this standard, the trusteeshall exercise reasonable care, skill, and caution.
B. A trustee's investment and management decisions respecting individualassets shall be evaluated not in isolation but in the context of the trustportfolio as a whole and as a part of an overall investment strategy havingrisk and return objectives reasonably suited to the trust.
C. Among circumstances that a trustee shall consider in investing andmanaging trust assets are such of the following as are relevant to the trustor 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 overalltrust portfolio, which may include financial assets, interests in closelyheld enterprises, tangible and intangible personal property, and realproperty;
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 orappreciation of capital; and
8. An asset's special relationship or special value, if any, to the purposesof the trust or to one or more of the beneficiaries.
D. A trustee shall make a reasonable effort to verify facts relevant to theinvestment and management of trust assets.
E. A trustee may invest in any kind of property or type of investmentconsistent with the standards of this Act.
F. A trustee who has special skills or expertise, or is named trustee inreliance upon the trustee's representation that the trustee has specialskills or expertise, has a duty to use those special skills or expertise.
G. A trustee may hold any policies of life insurance acquired by gift orpursuant to an express permission or direction in the governing instrumentincluding an authority granted by subdivision (1) (r) of § 64.1-57 with noduty or need to (i) determine whether any such policy is or remains a properinvestment, (ii) dispose of such policy in order to diversify the investmentsof the trust, or (iii) exercise policy options under any such contract notessential to the continuation of the life insurance provided by suchcontract. However, apart from these specific authorities, this subsection isnot intended and shall not be construed to affect the application of thestandard of judgment and care as set forth in this section. This subsectionshall apply to all trusts, regardless of when established.
(1999, c. 772.)