Language That Triggers Prudent Investor

Common Phrases That Activate the Standard

Trust documents from different decades use different language about investments. This statute lists terms that automatically invoke the Uniform Prudent Investor Act. The trustee does not need to guess whether the rule applies.

Other recognized phrases include "prudent man rule," "prudent trustee rule," and "prudent investor rule." Even older language about "judgment and care under the circumstances then prevailing" triggers this standard. Each investment decision falls under the same framework.

What This Means for Older Trust Documents

Many trusts created years ago include language that predates the current framework. This statute ensures those trusts are not stuck with outdated limits.

If the trust uses any recognized phrase, the trustee has authority to invest using modern portfolio theory. This means they can use diversification strategies available today.

This is especially relevant for trusts drafted in the 1980s or 1990s. Even if the original language sounds conservative, the statute treats it as full permission. The trust can limit this authority, but without a limit, the standard applies in full.

Practical Impact on Families

For families with older trust documents, this statute removes a common source of confusion. A trustee does not need to hire a lawyer just to figure out whether they can diversify.

If the trust uses a recognized phrase, the trustee must follow the modern standard of care. This includes setting the scope and terms of any delegation to investment professionals.

This rule also helps families evaluate trustee performance. If a trust contains trigger phrases, the trustee faces the full prudent investor standard. That means balanced portfolios, reasonable risk, and steady attention to the trust's goals.