AB458,4,423 66.04 (2) (b) Any town, city or village may invest surplus funds in any bonds
24or securities issued under the authority of the municipality, whether the bonds or
25securities create a general municipality liability or a liability of the property owners

1of the municipality for special improvements, and may sell or hypothecate the bonds
2or securities. Funds of any employer, as defined by s. 40.02 (28), in a deferred
3compensation plan may also be invested and reinvested in the same manner
4authorized for investments under s. 881.01 (1).
AB458, s. 5 5Section 5. 881.01 of the statutes is repealed and recreated to read:
AB458,4,9 6881.01 Uniform prudent investor act. (1) Prudent investor rule. (a)
7Except as otherwise provided in par. (b), a trustee who invests and manages trust
8assets owes a duty to the beneficiaries of the trust to comply with the prudent
9investor rule set forth in this section.
AB458,4,1310 (b) The prudent investor rule, a default rule, may be expanded, restricted,
11eliminated or otherwise altered by the provisions of a trust. A trustee is not liable
12to a beneficiary to the extent that the trustee acted in reasonable reliance on the
13provisions of the trust.
AB458,4,18 14(2) Standard of care; portfolio strategy; risk and return objectives. (a) A
15trustee shall invest and manage trust assets as a prudent investor would, by
16considering the purposes, terms, distribution requirements and other circumstances
17of the trust. In satisfying this standard, the trustee shall exercise reasonable care,
18skill and caution.
AB458,4,2219 (b) A trustee's investment and management decisions about individual assets
20shall be evaluated not in isolation but in the context of the trust portfolio as a whole
21and as a part of an overall investment strategy having risk and return objectives
22reasonably suited to the trust.
AB458,4,2523 (c) Among circumstances that a trustee shall consider in investing and
24managing trust assets are those of the following that are relevant to the trust or its
25beneficiaries:
AB458,5,1
11. General economic conditions.
AB458,5,22 2. The possible effect of inflation or deflation.
AB458,5,33 3. The expected tax consequences of investment decisions or strategies.
AB458,5,64 4. The role that each investment or course of action plays within the overall
5trust portfolio, which may include financial assets, interests in closely held
6enterprises, tangible and intangible personal property and real property.
AB458,5,77 5. The expected total return from income and the appreciation of capital.
AB458,5,88 6. Other resources of the beneficiaries.
AB458,5,109 7. Needs for liquidity, regularity of income and preservation or appreciation of
10capital.
AB458,5,1211 8. An asset's special relationship or special value to the purposes of the trust
12or to one or more of the beneficiaries.
AB458,5,1413 (d) A trustee shall make a reasonable effort to verify facts relevant to the
14investment and management of trust assets.
AB458,5,1615 (e) A trustee may invest in any kind of property or type of investment consistent
16with the standards of this section.
AB458,5,1917 (f) A trustee who has special skills or expertise, or is named trustee in reliance
18upon the trustee's representation that the trustee has special skills or expertise, has
19a duty to use those special skills or expertise.
AB458,5,22 20(3) Diversification. A trustee shall diversify the investments of the trust
21unless the trustee reasonably determines that, because of special circumstances, the
22purposes of the trust are better served without diversifying.
AB458,6,3 23(4) Duties at inception of trusteeship. Within a reasonable time after
24accepting a trusteeship or receiving trust assets, a trustee shall review the trust's
25assets and make and implement decisions concerning the retention and disposition

1of assets, in order to bring the trust portfolio into compliance with the purposes,
2terms, distribution requirements and other circumstances of the trust and with the
3requirements of this section.
AB458,6,5 4(5) Loyalty. A trustee shall invest and manage the trust's assets solely in the
5interest of the beneficiaries.
AB458,6,8 6(6) Impartiality. If a trust has 2 or more beneficiaries, the trustee shall act
7impartially in investing and managing the trust assets, taking into account the
8differences between the interests of the beneficiaries.
AB458,6,11 9(7) Investment costs. In investing and managing trust assets, a trustee may
10incur only costs that are appropriate and reasonable in relation to the assets, the
11purposes of the trust and the skills of the trustee.
AB458,6,14 12(8) Reviewing compliance. Compliance with the prudent investor rule is
13determined in light of the facts and circumstances existing at the time of a trustee's
14decision or action and not by hindsight.
AB458,6,18 15(9) Delegation of investment and management functions. (a) A trustee may
16delegate investment and management functions that a prudent trustee of similar
17skills could properly delegate under the circumstances. The trustee shall exercise
18reasonable care, skill and caution in all of the following:
AB458,6,1919 1. Selecting an agent.
AB458,6,2120 2. Establishing the scope and terms of the delegation, consistent with the
21purposes and terms of the trust.
AB458,6,2322 3. Periodically reviewing the agent's actions in order to monitor the agent's
23performance and compliance with the terms of the delegation.
AB458,6,2524 (b) In performing a delegated function, an agent owes a duty to the trust to
25exercise reasonable care to comply with the terms of the delegation.
AB458,7,3
1(c) A trustee who complies with the requirements of par. (a) is not liable to the
2beneficiaries or to the trust for the decisions or actions of the agent to whom the
3function was delegated.
AB458,7,64 (d) By accepting the delegation of a trust function from the trustee of a trust
5that is subject to the law of this state, an agent submits to the jurisdiction of the
6courts of this state.
AB458,7,16 7(10) Phrases invoking standard of this section. The following phrases or
8similar phrases in a trust, unless otherwise limited or modified, authorize any
9investment or strategy permitted under this section: "investments permissible by
10law for investment of trust funds"; "legal investments"; "authorized investments";
11"using the judgment and care under the circumstances then prevailing that persons
12of prudence, discretion, and intelligence exercise in the management of their own
13affairs, not in regard to speculation but in regard to the permanent disposition of
14their funds, considering the probable income as well as the probable safety of their
15capital"; "prudent man rule"; "prudent trustee rule"; "prudent person rule"; and
16"prudent investor rule".
AB458,7,20 17(11) Application to existing trusts. This section applies to trusts existing on,
18or created on or after, the effective date of this subsection .... [revisor inserts date].
19As applied to trusts existing on the effective date of this subsection .... [revisor inserts
20date], this section governs only decisions or actions occurring after that date.
AB458,7,24 21(12) Uniformity of application and construction. This section shall be
22applied and construed to effectuate its general purpose to make uniform the law with
23respect to the subject of this section among the states that have enacted this uniform
24legislation.
AB458, s. 6 25Section 6. 881.02 of the statutes is amended to read:
AB458,8,7
1881.02 Construction; court orders; written instruments. Nothing
2contained in this chapter shall be construed as authorizing any departure from, or
3variation of, the express terms or limitations set forth in any will, agreement, court
4order or other instrument creating or defining the fiduciary's duties and powers, but
5the terms "legal investment" or "authorized investment" or words of similar import,
6as used in any such instrument, shall be taken to mean any investment which is
7permitted by the terms of this chapter
.
AB458, s. 7 8Section 7. 881.06 of the statutes is repealed.
AB458,8,99 (End)
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