CALIFORNIA UNIFORM PRUDENT INVESTOR ACT
2019 California Code
Probate Code – PROB
DIVISION 9 – TRUST LAW
PART 4 – TRUST ADMINISTRATION
CHAPTER 1 – Duties of Trustees
ARTICLE 2.5 – Uniform Prudent Investor Act
16045. This article, together with subdivision (a) of Section 16002 and Section 16003, constitutes the prudent investor rule and may be cited as the Uniform Prudent Investor Act.
(Added by Stats. 1995, Ch. 63, Sec. 6. Effective January 1, 1996.)
[16002. (a) The trustee has a duty to administer the trust solely in the interest of the beneficiaries.
16003. If a trust has two or more beneficiaries, the trustee has a duty to deal impartially with them and shall act impartially in investing and managing the trust property, taking into account any differing interests of the beneficiaries.]
16046. (a) Except as provided in subdivision (b), a trustee who invests and manages trust assets owes a duty to the beneficiaries of the trust to comply with the prudent investor rule.
(b) The settlor may expand or restrict the prudent investor rule by express provisions in the trust instrument. A trustee is not liable to a beneficiary for the trustee’s good faith reliance on these express provisions.
(Added by Stats. 1995, Ch. 63, Sec. 6. Effective January 1, 1996.)
16047. 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.
(Added by Stats. 1995, Ch. 63, Sec. 6. Effective January 1, 1996.)
16048. In making and implementing investment decisions, the trustee has a duty to diversify the investments of the trust unless, under the circumstances, it is prudent not to do so.
(Added by Stats. 1995, Ch. 63, Sec. 6. Effective January 1, 1996.)
16049. Within a reasonable time after accepting a trusteeship or receiving trust assets, a trustee shall review the trust 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 chapter.
(Added by Stats. 1995, Ch. 63, Sec. 6. Effective January 1, 1996.)
16050. In investing and managing trust assets, a trustee may only incur costs that are appropriate and reasonable in relation to the assets, overall investment strategy, purposes, and other circumstances of the trust.
(Added by Stats. 1995, Ch. 63, Sec. 6. Effective January 1, 1996.)
16051. 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.
Added by Stats. 1995, Ch. 63, Sec. 6. Effective January 1, 1996.)
16052. (a) A trustee may delegate investment and management functions as prudent under the circumstances. The trustee shall exercise prudence in the following:
(1) Selecting an agent.
(2) Establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust.
(3) Periodically reviewing the agent’s overall performance and compliance with the terms of the delegation.
(b) In performing a delegated function, an agent has a duty to exercise reasonable care to comply with the terms of the delegation.
(c) Except as otherwise provided in Section 16401, a trustee who complies with the requirements of subdivision (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.
(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.
(Added by Stats. 1995, Ch. 63, Sec. 6. Effective January 1, 1996.)
16053. The following terms or comparable language in the provisions of a trust, unless otherwise limited or modified, authorizes any investment or strategy permitted under this chapter: “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.”
(Added by Stats. 1995, Ch. 63, Sec. 6. Effective January 1, 1996.)
16054. This article applies to trusts existing on and created after its effective date. As applied to trusts existing on its effective date, this article governs only decisions or actions occurring after that date.
(Added by Stats. 1995, Ch. 63, Sec. 6. Effective January 1, 1996.)