A Rule That Reaches Back
When the prudent investor rule was adopted, the legislature did not limit it to new trusts only. This statute makes clear that the rule applies to trusts already in existence as of July 20, 1996, as well as any trust created afterward. The provisions of a trust do not override this rule unless the trust document specifically restricts, eliminated, or otherwise modified the standard.
This article applies to trusts existing on and created after July 20, 1996.
A.R.S. § 14-10909(A)That means a trust created in the 1980s is still subject to modern prudent investor standards when the trustee makes investment decisions today. A trustee who manages trust assets owes a duty to follow the current framework. They cannot rely on outdated rules simply because the trust was drafted before these Arizona Revised Statutes existed.
A Fair Line for Past Decisions
While the rule applies broadly, the statute draws a reasonable boundary. For trusts that existed before July 20, 1996, the prudent investor standard governs only decisions or actions that occurred after that date. If a trustee acted before the rule took effect, the trustee is not liable under the new standard.
As applied to trusts existing on July 20, 1996, this article governs only decisions or actions occurring after that date.
A.R.S. § 14-10909(B)This prevents retroactive liability. A trustee who made investment choices under the old rules before 1996 is not judged by a standard that did not yet exist. Going forward, every trustee is expected to follow the prudent investor framework regardless of when the trust was originally created.
How This Affects Families with Older Trusts
Many families have trusts that were created decades ago and are still active. This statute is important for trust administration of those older instruments. It confirms that the beneficiaries of the trust are entitled to the same investment protections as beneficiaries of newer trusts.
If a family member is serving as trustee for a trust created in the 1970s or 1980s, they should understand that modern investment standards apply to every decision they make today. The trustee is not liable for choices made before 1996 under the old framework. But from that date forward, they must follow the same rules that govern any current trust.
For families reviewing a trustee's performance, this statute also clarifies the timeline. Any concerns about how trust assets were managed before July 20, 1996, fall under the older standards. Decisions made after that date are measured against the prudent investor rule as written in the Arizona Revised Statutes.