2018 Georgia Code

Title 53 – Wills, Trusts, and Administration of Estates

Chapter 12 – Trusts

Article 16 – Trust Investments

Part 1 – Investments Generally
(Part 1 (§ 53-12-340 through § 53-12-345) of Article 16 adopts many provisions of the Uniform Prudent Investor Act)


§ 53-12-340 – Investment standard

(a) In investing and managing trust property, a trustee shall exercise the judgment and care under the circumstances then prevailing of a prudent person acting in a like capacity and familiar with such matters, considering the purposes, provisions, and distribution requirements of the trust.
(b) Among the factors that a trustee shall consider in investing and managing trust assets are such of the following as are relevant to the trust or its beneficiaries:
(1) General economic conditions;
(2) The possible effect of inflation or deflation;
(3) Anticipated tax consequences;
(4) The attributes of the portfolio,
(5) The expected return from income and appreciation;
(6) Needs for liquidity, regularity of income, and preservation or appreciation of capital;
(7) An asset’s special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries or to the settlor;
(8) The anticipated duration of the trust; and
(9) Any special circumstances.
(c) Any determination of liability for investment performance shall consider not only the performance of a particular investment but also the performance of the portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust.
(d) A trustee who has special investment skills or expertise shall have a duty to use those special skills or expertise. A trustee who is named trustee in reliance upon such trustee’s representation that such trustee has special investment skills or expertise shall be held liable for failure to make use of such degree of skill or expertise.
(e) A trustee may invest in any kind of property or type of investment consistent with the standards of this article.
(f) A trustee that is a bank or trust company shall not be precluded from acquiring and retaining the securities of or other interests in an investment company or investment trust because the bank or trust company or an affiliate provides services to the investment company or investment trust as investment adviser, custodian, transfer agent, registrar, sponsor, distributor, manager, or otherwise and receives compensation for such services.

§ 53-12-341 – Concentrated holdings and diversification

A trustee shall reasonably manage the risk of concentrated holdings of assets in a trust by diversifying or by using other appropriate mechanisms, except as otherwise provided in this Code section, as follows:
(1) The duty imposed by this Code section shall not apply if the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without complying with the duty;
(2) The trustee shall not be liable for failing to comply with the duty imposed by this Code section to the extent that the terms of the trust instrument limit or waive the duty; and
(3) Except as provided in this paragraph, the duty imposed by this Code section shall apply on or after January 1, 2011. With respect to any trust that is or becomes irrevocable before January 1, 2011, the duty imposed by this Code section shall not apply:
(A) To the trust to the extent such trust instrument directs or permits the trustee to retain, invest, exchange, or reinvest assets without regard to any duty to diversify, without the need to diversify or create a diversity of investments, or without liability for either depreciation or failing to diversify, or contains other similar language expressing a settlor’s intent to provide similar discretion to the trustee; or
(B) Absent gross neglect, with respect to an asset that was transferred to the trustee of such trust by any settlor or gratuitous transferor.

§ 53-12-342 – 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, provisions, distributions requirements, and other circumstances of the trust and with the requirements of this article.

§ 53-12-343 – Reviewing compliance

Compliance with the investment rules of this part shall be determined in light of the facts and circumstances existing at the time of a trustee’s decision or action and not by hindsight.

§ 53-12-344 – Language invoking application of article

The following terminology or comparable language in the provisions of a trust, unless otherwise limited or modified, shall authorize any investment or strategy permitted under this article and Article 17 of 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.”

§ 53-12-345 – Delegation

(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 provisions of the trust; and
(3) Reviewing periodically the agent’s actions in order to monitor the agent’s performance and compliance with the terms of the delegation.
(b) In performing a delegation function, an agent shall owe 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 subsection (a) of this Code section, and who takes reasonable steps to compel an agent to whom the function was delegated to redress a breach of duty to the trust, shall not be liable to the beneficiaries of the trust 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 laws of this state, an agent shall waive the defense of lack of personal jurisdiction and shall submit to the jurisdiction of this state.

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