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), atrustee who invests and manages trust assets owes a duty to thebeneficiaries of the trust to comply with the prudent investor rule setforth in this chapter.
(b) The prudent investor rule, a default rule, may be expanded,restricted, eliminated, or otherwise altered by the provisions of atrust. A trustee is not liable to a beneficiary to the extent that thetrustee acted in reasonable reliance on the provision of the trust.
(c) This chapter applies to a trustee or escrow agent, acting asfiduciary, of:
(1) a perpetual care fund or an endowment care fund establishedunder IC 23-14-48-2;
(2) a prepaid funeral plan or funeral trust established underIC 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 describedin 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 aprudent investor would, by considering the purposes, terms,distribution requirements, and other circumstances of the trust. Insatisfying this standard, the trustee shall exercise reasonable care,skill, and caution.
(b) A trustee's investment and management decisions respectingindividual assets must be evaluated not in isolation but in the contextof the trust portfolio as a whole and as a part of an overall investmentstrategy having risk and return objectives reasonably suited to thetrust.
(c) Among circumstances that a trustee shall consider in investingand managing trust assets are those of the following that are relevantto 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 orstrategies.
(4) The role that each investment or course of action playswithin the overall trust portfolio, which may include financialassets, interests in closely held enterprises, tangible andintangible 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 preservationor appreciation of capital.
(8) An asset's special relationship or special value, if any, to thepurposes of the trust or to one (1) or more of the beneficiaries.
(d) A trustee shall make a reasonable effort to verify facts relevantto the investment and management of trust assets.
(e) A trustee may invest in any kind of property or type ofinvestment consistent with the standards of this chapter.
(f) A trustee who has special skills or expertise, or is namedtrustee in reliance upon the trustee's representation that the trusteehas special skills or expertise, has a duty to use the special skills orexpertise.
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 unlessthe trustee reasonably determines that, because of specialcircumstances, the purposes of the trust are better served withoutdiversifying.
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 orreceiving trust assets, a trustee shall review the trust assets and makeand implement decisions concerning the retention and disposition ofassets in order to bring the trust portfolio into compliance with thepurposes, terms, distribution requirements, and other circumstancesof 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 inthe 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 shallact impartially in investing and managing the trust assets, taking intoaccount 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 theassets, 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 determinedin light of the facts and circumstances existing at the time of atrustee'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 managementfunctions that a prudent trustee of comparable skills could properlydelegate under the circumstances. The trustee shall exercisereasonable 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 tomonitor the agent's performance and compliance with the termsof the delegation.
(b) In performing a delegated function, an agent owes a duty tothe trust to exercise reasonable care.
(c) By accepting the delegation of a trust function from the trusteeof a trust that is subject to the law of Indiana, an agent submits to thejurisdiction 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 theprovisions of a trust, unless otherwise limited or modified, authorizesany investment or strategy permitted under this chapter:
(1) "Investments permissible by law for investment of trustfunds".
(2) "Legal investments".
(3) "Authorized investments".
(4) "Using the judgment and care under the circumstances thenprevailing that persons of prudence, discretion, and intelligenceexercise in the management of their own affairs, not in regardto speculation but in regard to the permanent disposition of theirfunds, considering the probable income as well as the probablesafety 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 afterJune 30, 1999. As applied to trusts existing on June 30, 1999, thischapter 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 effectuateits general purpose to make uniform the law with respect to thesubject 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 UniformPrudent Investor Act".
As added by P.L.137-1999, SEC.3.