Investing With the Whole Picture in Mind
This statute spells out what it means to manage trust assets well. A trustee must consider the trust's purpose, distribution schedule, tax effects, and inflation. They must also look at the beneficiaries' other resources.
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.
A.R.S. § 14-10902(A)A single investment that loses value does not mean the trustee failed. The law looks at the portfolio as a whole. This means courts review the overall strategy, not just one result.
Factors a Trustee Must Consider
The statute lists factors that should guide investment choices. These include economic conditions, inflation, expected tax effects, and how each asset fits the broader portfolio.
A trustee's investment and management decisions respecting individual assets shall not be evaluated 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.
A.R.S. § 14-10902(B)The trustee must also weigh total return, liquidity needs, and the beneficiaries' other resources. Some assets may hold special value to the trust or to a beneficiary.
Trustees have a duty to verify facts about their investments. This means doing homework, not just relying on guesses. No type of investment is off-limits if it fits the trust's needs.
These duties help families choose the right person to manage the trust. Family members and professionals must follow the same standard when building an investment strategy.