Delegating Without Losing Protection
Not every trustee has investment expertise. This statute recognizes that reality. Under applicable laws, a trustee owes a duty to manage trust assets responsibly but may delegate investment functions to professionals. A prudent trustee of comparable skills could properly delegate under the circumstances when the task requires specialized knowledge.
A fiduciary may delegate investment and management functions that a prudent investor of comparable skills might delegate under the circumstances.
A.R.S. § 14-10907(A)The key protections come with conditions. A trustee who delegates is shielded from liability only if they used reasonable care in three areas. First, choosing the right investment agent. Second, defining the scope and terms of the trust delegation. Third, reviewing the agent's actions regularly to confirm they are performing as agreed.
Accountability Stays in the Picture
Delegation does not mean abandonment. The investment agent must follow the agreed scope and exercise reasonable care, skill, and caution. An agent who claims special investment expertise is held to that higher standard. If the agent fails to comply with the terms of the trust delegation, they are liable to the trust directly.
An investment agent who accepts the delegation of a fiduciary's function from a fiduciary who is subject to the jurisdiction of a court of this state is deemed to have submitted to the jurisdiction of that court even if the delegation agreement provides for a different jurisdiction or venue.
A.R.S. § 14-10907(D)The statute also permits co-trustees to delegate functions among themselves when one has greater investment skill. Investing in a mutual fund is not considered delegation. Neither the fund nor its advisor becomes an investment agent under this rule.
What This Means for Trust Administration
In trust administration, this statute gives families flexibility. A family member serving as trustee does not need to be a financial expert. They can hire professionals to handle investment management while keeping oversight of the process. The trustee still owes a duty to monitor the agent and ensure the delegation stays within the terms of the trust.
This is different from statutes that address investment compliance or the prudent investor standard itself. Those rules set the benchmark for how investments should perform. This statute addresses who can make the decisions and what happens when the trustee brings in outside help under applicable laws.