CHAPTER 3.5. INDIANA UNIFORM PRUDENT INVESTOR ACT
IC 30-4-3.5
Chapter 3.5. Indiana Uniform Prudent Investor Act
IC 30-4-3.5-1
Compliance with prudent investor rule
Sec. 1. (a) Except as otherwise provided in subsection (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 set
forth in this chapter.
(b) The prudent investor rule, a default rule, may be expanded,
restricted, eliminated, or otherwise altered by 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 provision of the trust.
(c) This chapter applies to a trustee or escrow agent, acting as
fiduciary, of:
(1) a perpetual care fund or an endowment care fund established
under IC 23-14-48-2;
(2) a prepaid funeral plan or funeral trust established under
IC 30-2-9;
(3) a funeral trust established under IC 30-2-10; or
(4) a trust or escrow account created from payments of funeral,
burial services, or merchandise in advance of need, as described
in IC 30-2-13.
As added by P.L.137-1999, SEC.3. Amended by P.L.61-2008,
SEC.14.
IC 30-4-3.5-2
Prudent investor rule
Sec. 2. (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 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 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.
(8) An asset's special relationship or special value, if any, to the
purposes of the trust or to one (1) 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 this chapter.
(f) A trustee who has special skills or expertise, or is named
trustee in reliance upon the trustee's representation that the trustee
has special skills or expertise, has a duty to use the special skills or
expertise.
As added by P.L.137-1999, SEC.3.
IC 30-4-3.5-3
Diversification of investments
Sec. 3. 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.
As added by P.L.137-1999, SEC.3.
IC 30-4-3.5-4
Review of trust assets
Sec. 4. 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.
As added by P.L.137-1999, SEC.3.
IC 30-4-3.5-5
Trust managed in interest of beneficiaries
Sec. 5. A trustee shall invest and manage the trust assets solely in
the interest of the beneficiaries.
As added by P.L.137-1999, SEC.3.
IC 30-4-3.5-6
Impartial management
Sec. 6. If a trust has at least two (2) beneficiaries, the trustee shall
act impartially in investing and managing the trust assets, taking into
account any differing interests of the beneficiaries.
As added by P.L.137-1999, SEC.3.
IC 30-4-3.5-7
Costs
Sec. 7. 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.
As added by P.L.137-1999, SEC.3.
IC 30-4-3.5-8
Determination of compliance with prudent investor rule
Sec. 8. 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.
As added by P.L.137-1999, SEC.3.
IC 30-4-3.5-9
Delegation of functions by trustee
Sec. 9. (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) reviewing the agent's actions periodically 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.
(c) By accepting the delegation of a trust function from the trustee
of a trust that is subject to the law of Indiana, an agent submits to the
jurisdiction of the courts of Indiana.
As added by P.L.137-1999, SEC.3.
IC 30-4-3.5-10
Authorization of investments or strategies
Sec. 10. 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:
(1) "Investments permissible by law for investment of trust
funds".
(2) "Legal investments".
(3) "Authorized investments".
(4) "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".
(5) "Prudent man rule".
(6) "Prudent trustee rule".
(7) "Prudent person rule".
(8) "Prudent investor rule".
As added by P.L.137-1999, SEC.3.
IC 30-4-3.5-11
Applicability of chapter
Sec. 11. This chapter applies to trusts existing on and created after
June 30, 1999. As applied to trusts existing on June 30, 1999, this
chapter governs only decisions or actions occurring after June 30,
1999.
As added by P.L.137-1999, SEC.3.
IC 30-4-3.5-12
Purpose of chapter
Sec. 12. This chapter shall be applied and construed to effectuate
its general purpose to make uniform the law with respect to the
subject of this chapter among the states enacting it.
As added by P.L.137-1999, SEC.3.
IC 30-4-3.5-13
Short title
Sec. 13. This chapter may be cited as the "Indiana Uniform
Prudent Investor Act".
As added by P.L.137-1999, SEC.3.