2018 Kansas Statutes




58-24a01. Prudent investor rule. (a) Except as otherwise provided in subsection (b), a fiduciary who invests and manages trust assets owes a duty to the beneficiaries of the trust to comply with the prudent investor rule set forth in this act.
(b) The prudent investor rule, a default rule, may be expanded, restricted, eliminated or otherwise altered by the provisions of a trust. A fiduciary is not liable to a beneficiary to the extent that the fiduciary acted in reasonable reliance on the provisions of the trust.
(c) As used in this act, “fiduciary” means a personal representative or a trustee. The term includes an executor, administrator, successor personal representative, special administrator, and a person performing substantially the same function.

58-24a02. Standard of care; portfolio strategy; risk and return objectives; trustee following written directions complies with standard of care. (a) A fiduciary 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 fiduciary shall exercise reasonable care, skill and caution.
(b) A fiduciary’s investment and management decisions respecting individual assets must 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 fiduciary 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) 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 who are eligible to receive discretionary payments of trust income or principal assets;
(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 fiduciary shall make a reasonable effort to verify facts relevant to the investment and management of trust assets.
(e) A fiduciary may invest in any kind of property or type of investment consistent with the standards of this act.
(f) A fiduciary who has special skills or expertise or is placed in a fiduciary capacity in reliance upon the fiduciary’s representation that the fiduciary has special skills or expertise, has a duty to use those special skills or expertise.
(g) In acquiring, investing, reinvesting, exchanging, retaining, selling and managing property of a trust which is revocable or amendable, a trustee following written directions regarding the property of the trust that are received by the trustee from the person or persons then having the power to revoke or amend the trust or from the person or persons other than the trustee, to whom the grantor delegates the right to give such written directions to the trustee shall be deemed to have complied with the standards provided in subsections (a) through (d). The trustee is authorized to follow such written directions regardless of any fiduciary obligations to which the directing party may also be subject.

58-24a03. Diversification. A fiduciary shall diversify the investments of the trust unless the fiduciary reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying.

58-24a04. Duties at inception of fiduciary relationship. Within a reasonable time after entering into a fiduciary relationship or receiving trust assets, a fiduciary 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 act.

58-24a05. Loyalty. A fiduciary shall invest and manage the trust assets solely in the interest of the beneficiaries.

58-24a06. Impartiality. If a trust has two or more beneficiaries, the fiduciary shall act impartially in investing and managing the trust assets, taking into account any differing interests of the beneficiaries.

58-24a07. Investment costs. In investing and managing trust assets, a fiduciary may only incur costs that are appropriate and reasonable in relation to the assets, the purposes of the trust and the skills of the fiduciary.

58-24a08. Reviewing compliance. Compliance with the prudent investor rule is determined in light of the fact and circumstances existing at the time of a fiduciary’s decision or action and not by hindsight.

58-24a09. Delegation of investment and management functions. (a) A fiduciary may delegate investment and management functions that a prudent fiduciary of comparable skills could properly delegate under the circumstances. For a fiduciary to properly delegate investment functions under this subsection, the fiduciary shall:
(1) Exercise reasonable care, skill and caution in selection of the investment agent, in establishing the scope and specific terms of any delegation and in periodically reviewing the investment agent’s actions in order to monitor overall performance and compliance with the scope and specific terms of the delegation;
(2) conduct an inquiry into the experience, performance history, errors and omissions coverage, professional licensing or registration, if any, and financial stability of the investment agent; and
(3) if a trust, send written notice of such trust’s intention to begin delegating investment functions under this section to each beneficiary eligible to receive income from the trust on the date of the initial delegation at least 30 days before such delegation. This notice shall thereafter, until or unless each beneficiary eligible to receive income from the trust at the time are notified to the contrary, authorize the fiduciary to delegate investment functions pursuant to this section.
(b) In performing a delegated function, an investment agent shall be subject to the same standards that are applicable to the fiduciary.
(c) An investment agent shall be liable to each beneficiary of the trust and to the designated fiduciary to the same extent as if the investment agent were a designated fiduciary in relation to the exercise or nonexercise of the investment function.
(d) A fiduciary who complies with the requirements of subsection (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.
(e) By accepting the delegation of a trust function from the fiduciary of a trust that is subject to the law of this state, an agent submits to the jurisdiction of the courts of this state.

58-24a10. Language invoking standard of act. 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 act: “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.”

58-24a11. Application to existing trusts. This act applies to trusts existing on and created after the effective date of this act. As applied to trusts existing on the effective date of this act, this act governs only decisions or actions occurring after that date.

58-24a12. Uniformity of application and construction. This act shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this act among the states enacting it.

58-24a13. Short title. This act may be cited as the Kansas uniform prudent investor act.

58-24a14. Severability. If any provision of this act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this act which can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.

58-24a15. Investments of conservators. Conservators shall not invest funds under their control and management in investments other than those specifically permitted by K.S.A. 59-3078, and amendments thereto, except upon the entry of an order of a court of competent jurisdiction, after a hearing on a verified petition. Before authorizing any such investment, the court shall require evidence of value and advisability of such purchase.

58-24a16. Investments by fiduciaries in certain corporations and organizations. (a) Administrators, executors, conservators, trustees, insurance companies and other financial institutions, charitable, educational, eleemosynary corporations and organizations are authorized, in addition to investments now authorized by law, to invest funds which they are authorized by law to invest, in shares or savings deposits of federally insured savings and loan associations or federally chartered savings banks with main or branch offices, as defined in K.S.A. 12-1675a, and amendments thereto, in the state of Kansas and in credit unions which are, in whole or in part, insured with an insurer or guarantee corporation as required under K.S.A. 17-2246, and amendments thereto, and such investment shall be deemed and held to be legal investments for such funds.
(b) The governing body of any municipal corporation or quasi-municipal corporation, county, township, school district, area vocational-technical school, community college, firemen’s relief association, community mental health center, community facility for the mentally retarded or any other governmental entity, unit or division in the state of Kansas having authority to receive, hold and expend public moneys or funds may invest the same subject to and as provided by K.S.A. 9-1401, 9-1402, 9-1405, 9-1407, 12-1675 and 12-1676 and amendments thereto.

58-24a17. Investments by fiduciaries in certain loans. In addition to all other authority now provided by law for the investment of funds by executors, administrators, conservators, trustees or other fiduciaries, all executors, administrators, conservators, trustees or other fiduciaries may legally invest fiduciary or trust funds in any loan which has insurance or guaranty under the servicemen’s readjustment act of 1944 as from time to time in force, or as to which a commitment for any such insurance or guaranty has been made without regard to the limitations, restrictions and requirements of any other statutes, or of any rules of law respecting investments by executors, administrators, conservators, trustees or other fiduciaries.

58-24a18. Standards for investments by fiduciaries; deviation from instrument or court order not authorized; in investment company or trust. Nothing contained in K.S.A. 58-24a01, et seq., and amendments thereto, 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:
(a) Whenever any will, agreement, court order or other instrument creating or defining the fiduciary’s duties and powers, directs, requires, authorizes or permits the fiduciary to invest in securities of a certain kind or class, the fiduciary, in the absence of an express provision to the contrary, may buy, hold and sell such securities either directly or in the form of shares of or other interests in any open-end or closed-end management type investment company or investment trust registered under the investment company act of 1940, or any common trust fund of a state or national bank or trust company as authorized by K.S.A. 9-1609, and amendments thereto, if the portfolio of such investment company, investment trust or common trust fund is limited to securities of the designated kind or class and to repurchase agreements fully collateralized by such securities.
(b) The fact that such bank or trust company or an affiliate of the bank or trust company provides services to the investment company or investment trust such as that of an investment advisor, custodian, transfer agent, registrar, sponsor, distributor, manager or otherwise and is receiving reasonable remuneration for those services, shall not preclude such bank or trust company from investing or reinvesting in the securities of an open-end or closed-end management investment company or investment trust registered under the investment company act of 1940 (15 U.S.C. section 80a-1 et seq.) as amended.
With respect to any fiduciary account funds so invested, the bank or trust company or an affiliate of the bank or trust company shall conspicuously disclose by statement, prospectus, or otherwise to all current income beneficiaries of a fiduciary account the rate, formula or other method by which the remuneration for those services, provided to the investment company or investment trust, is determined. The investment into such investment company or investment trust must be in the best interest of the beneficiary of the fiduciary account, must meet the prudent investor standard, as defined in K.S.A. 58-24a02, and amendments thereto, and the total amount of all fees, charges and compensation derived from the fiduciary account, and remuneration for services provided to the investment company or investment trust, by the bank or trust company or an affiliate of the bank or trust company shall be reasonable.

58-24a19. Same; court’s power to permit deviation not restricted. Nothing contained in K.S.A. 58-24a01, et seq., and amendments thereto, shall be construed as restricting the power of a court of proper jurisdiction to permit a fiduciary to deviate from the terms of any will, agreement, or other instrument relating to the acquisition, investment, reinvestment, exchange, retention, sale or management of fiduciary property.

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