Delegating Without Losing Protection
Not every trustee has investment expertise. This statute recognizes that reality and allows trustees to delegate investment and management functions to professionals, just as a prudent investor with similar skills would.
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 exercised reasonable care in three areas: choosing the right investment agent, defining the scope and terms of the delegation, and periodically reviewing the agent's actions 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 to have special investment expertise is held to that higher standard. If the agent fails to comply, 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. And importantly, investing in a mutual fund is not considered delegation. Neither the fund nor its advisor becomes an investment agent under this rule.
