HB 321 AM: "An Act relating to trusts, to the prudent investor rule, and to standards of care applicable to personal representatives, conservators, and trustees; and providing for an effective date."
00HOUSE BILL NO. 321 am 01 "An Act relating to trusts, to the prudent investor rule, and to standards of care 02 applicable to personal representatives, conservators, and trustees; and providing for 03 an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 13.16.350(a) is amended to read: 06 (a) A personal representative is a fiduciary who shall observe the standards of 07 care applicable to trustees under AS 13.36.200 - 13.36.275 [AS DESCRIBED BY 08 AS 13.36.075]. A personal representative is under a duty to settle and distribute the 09 estate of the decedent in accordance with the terms of any probated and effective will 10 and AS 13.06 - AS 13.36, and as expeditiously and efficiently as is consistent with the 11 best interests of the estate. A personal representative shall use the authority conferred 12 by AS 13.06 - AS 13.36, the terms of the will, if any, and any order in proceedings 13 to which the personal representative is party for the best interests of successors to the 14 estate.
01 * Sec. 2. AS 13.26.245 is amended to read: 02 Sec. 13.26.245. General duty of conservator. In the exercise of powers, a 03 conservator shall act as fiduciary and shall observe the standards of care applicable to 04 trustees under AS 13.36.200 - 13.36.275 [AS DESCRIBED BY AS 13.36.075]. 05 * Sec. 3. AS 13.36 is amended by adding new sections to read: 06 Article 3A. Uniform Prudent Investor Act. 07 Sec. 13.36.200. Prudent investor rule. (a) Except as otherwise provided in 08 (b) of this section, a trustee who invests and manages trust assets owes a duty to the 09 beneficiaries of the trust to comply with the prudent investor rule set out in 10 AS 13.36.205 - 13.36.275. 11 (b) The prudent investor rule, a default rule, may be expanded, restricted, 12 eliminated, or otherwise altered by the direction of the settlor to the provisions of a 13 trust. A trustee is not liable to a beneficiary to the extent that the trustee acted in 14 reasonable reliance on the provisions of the trust. 15 Sec. 13.36.205. Standard of care; portfolio strategy; risk and return 16 objectives. (a) A trustee shall invest and manage trust assets as a prudent investor 17 would by considering the purposes, terms, distribution requirements, and other 18 circumstances of the trust. In satisfying this standard, the trustee shall exercise 19 reasonable care, skill, and caution. 20 (b) A trustee's investment and management decisions respecting individual 21 assets shall be evaluated not in isolation but in the context of the trust portfolio as a 22 whole and as a part of an overall investment strategy having risk and return objectives 23 reasonably suited to the trust. 24 (c) Among circumstances that a trustee shall consider in investing and 25 managing trust assets are those of the following that are relevant to the trust or its 26 beneficiaries: 27 (1) general economic conditions; 28 (2) the possible effect of inflation or deflation; 29 (3) the expected tax consequences of investment decisions or strategies; 30 (4) the role that each investment or course of action plays within the 31 overall trust portfolio, which may include financial assets, interests in closely held
01 enterprises, tangible and intangible personal property, and real property; 02 (5) the expected total return from income and the appreciation of 03 capital; 04 (6) other resources of the beneficiaries; 05 (7) needs for liquidity, regularity of income, and preservation or 06 appreciation of capital; and 07 (8) an asset's special relationship or special value, if any, to the 08 purposes of the trust or to one or more of the beneficiaries. 09 (d) A trustee shall make a reasonable effort to verify facts relevant to the 10 investment and management of trust assets. 11 (e) A trustee may invest in any kind of property or type of investment 12 consistent with the standards of AS 13.36.200 - 13.36.275. 13 (f) A trustee who has special skills or expertise, or is named trustee in reliance 14 on the trustee's representation that the trustee has special skills or expertise, has a duty 15 to use those special skills or expertise. 16 Sec. 13.36.210. Diversification. A trustee shall diversify the investments of 17 the trust unless the trustee reasonably determines that, because of special 18 circumstances, the purposes of the trust are better served without diversifying. 19 Sec. 13.36.215. Duties at inception of trusteeship. Within a reasonable time 20 after accepting a trusteeship or receiving trust assets, a trustee shall review the trust 21 assets and make and implement decisions concerning the retention and disposition of 22 assets in order to bring the trust portfolio into compliance with the purposes, terms, 23 distribution requirements, and other circumstances of the trust and with the 24 requirements of AS 13.36.200 - 13.36.275. 25 Sec. 13.36.220. Loyalty. A trustee shall invest and manage the trust assets 26 solely in the interest of the beneficiaries. 27 Sec. 13.36.225. Impartiality. If a trust has two or more beneficiaries, the 28 trustee shall act impartially in investing and managing the trust assets, taking into 29 account any differing interests of the beneficiaries. 30 Sec. 13.36.230. Investment costs. In investing and managing trust assets, a 31 trustee may only incur costs that are appropriate and reasonable in relation to the
01 assets, the purposes of the trust, and the skills of the trustee. 02 Sec. 13.36.235. Reviewing compliance. Compliance with the prudent investor 03 rule is determined in light of the facts and circumstances existing at the time of a 04 trustee's decision or action and not by hindsight. 05 Sec. 13.36.240. Delegation of investment and management functions. (a) 06 A trustee may delegate investment and management functions that a prudent trustee 07 of comparable skills could properly delegate under the circumstances. The trustee 08 shall exercise reasonable care, skill, and caution in 09 (1) selecting an agent; 10 (2) establishing the scope and terms of the delegation, consistent with 11 the purposes and terms of the trust; and 12 (3) periodically reviewing the agent's actions in order to monitor the 13 agent's performance and compliance with the terms of the delegation. 14 (b) In performing a delegated function, an agent owes a duty to the trust to 15 exercise reasonable care to comply with the terms of the delegation. 16 (c) A trustee who complies with the requirements of (a) of this section is not 17 liable to the beneficiaries or to the trust for the decisions or actions of the agent to 18 whom the function was delegated. 19 (d) By accepting the delegation of a trust function from the trustee of a trust 20 that is subject to the law of this state, an agent submits to the jurisdiction of the courts 21 of this state. 22 Sec. 13.36.260. Language invoking standard of AS 13.36.200 - 13.36.275. 23 The following terms or comparable language in the provisions of a trust, unless 24 otherwise limited or modified, authorizes an investment or strategy permitted under 25 AS 13.36.200 - 13.36.275: "investments permissible by law for investment of trust 26 funds," "legal investments," "authorized investments," "using the judgment and care 27 under the circumstances then prevailing that persons of prudence, discretion, and 28 intelligence exercise in the management of their own affairs, not in regard to 29 speculation but in regard to the permanent disposition of their funds, considering the 30 probable income as well as the probable safety of their capital," "prudent man rule," 31 "prudent trustee rule," "prudent person rule," and "prudent investor rule."
01 Sec. 13.36.265. Application. (a) AS 13.36.200 - 13.36.275 apply to trusts 02 existing on and created after the effective date of those sections. As applied to trusts 03 existing on the effective date of those sections, AS 13.36.200 - 13.36.275 govern only 04 decisions or actions occurring after that date. 05 (b) AS 13.36.200 - 13.36.275 govern only decisions or actions of personal 06 representatives under AS 13.16.350(a) or of conservators under AS 13.26.245 that 07 occur on or after the effective date of AS 13.36.200 - 13.36.275. 08 Sec. 13.36.270. Uniformity of application and construction. AS 13.36.200 - 09 13.36.275 shall be applied and construed to carry out their general purpose to make 10 uniform the law with respect to the subject of those sections among the states that 11 enact them. 12 Sec. 13.36.275. Short title. AS 13.36.200 - 13.36.275 may be cited as the 13 Alaska Uniform Prudent Investor Act. 14 * Sec. 4. AS 13.36.075 is repealed. 15 * Sec. 5. This Act takes effect immediately under AS 01.10.070(c).