ALASKA UNIFORM PRUDENT INVESTOR ACT
2019 Alaska Statutes
Title 13. Decedents’ Estates, Guardianships, Transfers, Trusts, and Health Care Decisions
Chapter 36. Trust Administration
Article 4. Alaska Uniform Prudent Investor Act.
Sec. 13.36.225. Prudent investor rule.
(a) Except as otherwise provided in (b) of this section and AS 13.36.273, a trustee who invests and manages trust assets owes a duty to the beneficiaries of the trust to comply with the prudent investor rule set out in AS 13.36.230 - 13.36.290.
(b) The prudent investor rule, a default rule, may be expanded, restricted, eliminated, or otherwise altered by the direction of the settlor to 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.
Sec. 13.36.230. 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.
(b) A trustee's investment and management decisions respecting 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. (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: (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 overall trust portfolio, which may include financial assets, interests in closely held enterprises, tangible and intangible personal property, and real property; (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 or appreciation of capital; and (8) an asset's special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries. (d) A trustee shall make a reasonable effort to verify facts relevant to the investment and management of trust assets. (e) A trustee may invest in any kind of property or type of investment consistent with the standards of AS 13.36.225 - 13.36.290. (f) A trustee who has special skills or expertise, or is named trustee in reliance on the trustee's representation that the trustee has special skills or expertise, has a duty to use those special skills or expertise. Sec. 13.36.235. 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. Sec. 13.36.240. Duties at inception of trusteeship. 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 AS 13.36.225 - 13.36.290. Sec. 13.36.245. Loyalty. A trustee shall invest and manage the trust assets solely in the interest of the beneficiaries. Sec. 13.36.250. Impartiality. If a trust has two or more beneficiaries, the trustee shall act impartially in investing and managing the trust assets, taking into account any differing interests of the beneficiaries. Sec. 13.36.260. Investment costs. In investing and managing trust assets, a trustee may only incur costs that are appropriate and reasonable in relation to the assets, the purposes of the trust, and the skills of the trustee. Sec. 13.36.265. 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. Sec. 13.36.270. Delegation of investment and management functions. (a) A trustee may delegate investment and management functions that a prudent trustee of comparable skills could properly delegate under the circumstances. The trustee shall exercise reasonable care, skill, and caution in (1) selecting an agent; (2) establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust; and (3) periodically reviewing the agent's actions in order to monitor the agent's performance and compliance with the terms of the delegation. (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. (c) A trustee who complies with the requirements of (a) of this section 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. Sec. 13.36.273. Trustee duties relating to insurance. (a) With respect to a contract for life insurance acquired or retained for a trust on the life of a qualified person, a trustee does not have a duty to determine whether the contract was procured or effected in accordance with AS 21.42.020 unless the trust instrument provides otherwise or unless the trustee applied for or accepted ownership of a contract of life insurance and had knowledge that (1) when the contract of life insurance was issued, the benefits were not payable to a person specified in AS 21.42.020; or (2) the contract was purchased with resources or guarantees directly or indirectly provided by a person who, when the contract was entered into, did not have an insurable interest in the insured, and, when the contract was entered into, there was a verbal or written arrangement, agreement, or plan with a third party to transfer ownership of the policy or the policy benefits in a manner that would violate the law of this state. (b) With respect to a contract for life insurance acquired or retained for a trust on the life of a qualified person, if this subsection applies under (c) of this section, a trustee does not have a duty to (1) determine whether a contract of life insurance is a proper investment; (2) investigate the financial strength of the person issuing the life insurance policy; (3) determine whether to exercise a policy option available under the contract; (4) diversify the contract or the assets of the trust with respect to the contract; or (5) inquire about or investigate the health or financial condition of an insured. (c) Unless the trust instrument provides otherwise, (b) of this section applies to a trustee if (1) the trust instrument refers to this section and makes this section applicable to contracts for life insurance held by the trust; or (2) the trustee notifies the qualified beneficiaries or a person who may represent and bind the qualified beneficiaries under AS 13.06.120 that the trustee is electing to have this section apply to a contract for life insurance held by the trust. (d) The notice provided under (c)(2) of this section must include a copy or restatement of (b) of this section and shall be provided (1) by mailing a copy of the notice by certified, registered, or ordinary first-class mail addressed to the person being notified at the post office address given in the person's demand for notice, if any, or at the person's office or place of residence, if known; (2) by delivering a copy of the notice personally to the person being notified; or (3) if the address or identity of the person is not known and cannot be ascertained with reasonable diligence, by publishing, at least once a week for three consecutive weeks, a copy of the notice in a newspaper having general circulation in the judicial district where one of the trustees is located. (e) If, within 30 days after a person receives notice under (d)(1) or (2) of this section or 30 days after the last date of publication of the notice under (d)(3) of this section, a person delivers to the trustee a written objection to the application of (b) of this section, (b) of this section does not apply until the objection is withdrawn. (f) Under (a) and (b) of this section, the trustee is not liable to the beneficiaries of the trust or to another person for a loss sustained with respect to a life insurance contract to which (a) and (b) of this section apply. (g) Notwithstanding the other provisions of this section, unless the duties have been delegated to another person under AS 13.36.270, (a) and (b) of this section do not apply to a contract for life insurance purchased from an affiliate of a trustee or for which a trustee or an affiliate of the trustee receives a commission. In this subsection, “affiliate” means a person who controls, is controlled by, or is under common control with the trustee. (h) A trustee who performs fiduciary or advisory services related to a policy of life insurance to which (a)(1) or (2) of this section applies may not be compensated for performing the services to which (a)(1) or (2) of this section applies. (i) In this section, “qualified person” means a person who (1) is an insured or a proposed insured under a policy of life insurance or the spouse of that person; and (2) provides (A) the actual funds used to acquire or pay the premiums for the policy; or (B) assets the income or principal of which is used to acquire or pay the premiums for the policy. Sec. 13.36.275. Language invoking standard of AS 13.36.225 - 13.36.290. The following terms or comparable language in the provisions of a trust, unless otherwise limited or modified, authorizes an investment or strategy permitted under AS 13.36.225 - 13.36.290: “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.” Sec. 13.36.280. Application. (a) AS 13.36.225 - 13.36.290 apply to trusts existing on and created after May 23, 1998. As applied to trusts existing on May 23, 1998, AS 13.36.225 - 13.36.290 govern only decisions or actions occurring after May 23, 1998. (b) AS 13.36.225 - 13.36.290 govern only decisions or actions of personal representatives under AS 13.16.350(a) or of conservators under AS 13.26.500 that occur on or after May 23, 1998. Sec. 13.36.285. Uniformity of application and construction. AS 13.36.225 - 13.36.290 shall be applied and construed to carry out their general purpose to make uniform the law with respect to the subject of those sections among the states that enact them. Sec. 13.36.290. Short title. AS 13.36.225 - 13.36.290 may be cited as the Alaska Uniform Prudent Investor Act.