AB458: Bill Text

AB458,4,13 (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.

AB458,4,18 (2) 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.

AB458,4,22 (b) A trustee's investment and management decisions about individual assets shall 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.

AB458,4,25 (c) Among circumstances that a trustee shall consider in investing and managing trust assets are those of the following that are relevant to the trust or its beneficiaries:

AB458,5,1 1. General economic conditions.

AB458,5,2 2. The possible effect of inflation or deflation.

AB458,5,3 3. The expected tax consequences of investment decisions or strategies.

AB458,5,6 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.

AB458,5,7 5. The expected total return from income and the appreciation of capital.

AB458,5,8 6. Other resources of the beneficiaries.

AB458,5,10 7. Needs for liquidity, regularity of income and preservation or appreciation of capital.

AB458,5,12 8. An asset's special relationship or special value to the purposes of the trust or to one or more of the beneficiaries.

AB458,5,14 (d) A trustee shall make a reasonable effort to verify facts relevant to the investment and management of trust assets.

AB458,5,16 (e) A trustee may invest in any kind of property or type of investment consistent with the standards of this section.

AB458,5,19 (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.

AB458,5,22 (3) 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.

AB458,6,3 (4) Duties at inception of trusteeship. Within a reasonable time after accepting a trusteeship or receiving trust assets, a trustee shall review the trust's 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 section.

AB458,6,5 (5) Loyalty. A trustee shall invest and manage the trust's assets solely in the interest of the beneficiaries.

AB458,6,8 (6) Impartiality. If a trust has 2 or more beneficiaries, the trustee shall act impartially in investing and managing the trust assets, taking into account the differences between the interests of the beneficiaries.

AB458,6,11 (7) Investment costs. In investing and managing trust assets, a trustee may incur only costs that are appropriate and reasonable in relation to the assets, the purposes of the trust and the skills of the trustee.

AB458,6,14 (8) 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.

AB458,6,18 (9) Delegation of investment and management functions. (a) A trustee may delegate investment and management functions that a prudent trustee of similar skills could properly delegate under the circumstances. The trustee shall exercise reasonable care, skill and caution in all of the following:

AB458,6,19 1. Selecting an agent.

AB458,6,21 2. Establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust.

AB458,6,23 3. Periodically reviewing the agent's actions in order to monitor the agent's performance and compliance with the terms of the delegation.

AB458,6,25 (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.

AB458,7,3 (c) A trustee who complies with the requirements of par. (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.

AB458,7,6 (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.

AB458,7,16 (10) Phrases invoking standard of this section. The following phrases or similar phrases in a trust, unless otherwise limited or modified, authorize any investment or strategy permitted under this section: "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".

AB458,7,20 (11) Application to existing trusts. This section applies to trusts existing on, or created on or after, the effective date of this subsection .... [revisor inserts date]. As applied to trusts existing on the effective date of this subsection .... [revisor inserts date], this section governs only decisions or actions occurring after that date.

AB458,7,24 (12) Uniformity of application and construction. This section shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this section among the states that have enacted this uniform legislation.

AB458, s. 6 Section 6. 881.02 of the statutes is amended to read:

AB458,8,7 881.02 Construction; court orders; written instruments. Nothing contained in this chapter shall be construed as authorizing any departure from, or variation of, the express terms or limitations set forth in any will, agreement, court order or other instrument creating or defining the fiduciary's duties and powers, but the terms "legal investment" or "authorized investment" or words of similar import, as used in any such instrument, shall be taken to mean any investment which is permitted by the terms of this chapter.

AB458, s. 7 Section 7. 881.06 of the statutes is repealed.

AB458,8,9 (End)