What the Prudent Investor Rule Requires
When someone agrees to serve as trustee, they take on a legal duty to invest and manage trust assets responsibly. The prudent investor rule sets a baseline standard of care for every trustee unless the trust document says otherwise.
Except as 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 requirements of this article.
A.R.S. § 14-10901(A)The rule applies to both individual trustees and professional or corporate trustees. It is not about guaranteeing returns. It is about making informed, thoughtful decisions with the beneficiaries' interests in mind. Each investment decision is judged not in isolation but in the context of the trust portfolio as a whole.
A Default Rule, Not a Mandate
One of the most important features of this statute is that the prudent investor rule is a default. The trust document can expand, restrict, or eliminate it entirely. If the settlor wanted a trustee to follow a different investment approach, the trust terms control.
The prudent investor rule is a default rule and may be expanded, restricted, eliminated or otherwise altered by the provisions of a trust.
A.R.S. § 14-10901(B)A trustee who follows the trust's instructions in good faith is protected from liability, even if the investment results are not ideal. This protection encourages people to accept the role of trustee without fear of being second-guessed for following the settlor's wishes.