Prudent administration and the Ohio Uniform Prudent Investor Act

The prudent person standard

R.C. 5808.04 provides that a trustee administers the trust as a prudent person would, considering the purposes, terms, distributional requirements and other circumstances of the trust, and in doing so exercises reasonable care, skill and caution. A trustee incurs only costs appropriate and reasonable in relation to the assets, the purposes of the trust and the trustee's skills (R.C. 5808.05), and a trustee who has special skills or expertise, or was named in reliance on them, uses them (R.C. 5808.06).

The prudent investor rule

The Ohio Uniform Prudent Investor Act (R.C. 5809.01) provides that a trustee invests and manages trust assets as a prudent investor would, considering the purposes, terms, distribution requirements and other circumstances of the trust, with reasonable care, skill and caution, and makes a reasonable effort to verify the relevant facts (R.C. 5809.02). Decisions on individual assets are judged in the context of the portfolio as a whole and an overall strategy with risk and return objectives reasonably suited to the trust, considering general economic conditions, inflation, tax consequences, each investment's role, expected total return, the beneficiaries' other resources, needs for liquidity and income, and an asset's special relationship to the trust's purposes or a beneficiary.

A trustee may invest in any kind of property consistent with the act and diversifies unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying (R.C. 5809.03); the instrument may expand, restrict or eliminate the act (R.C. 5809.01(C)), and terms such as "prudent investor rule" or "legal investments" invoke it (R.C. 5809.07).

The review at the start, and judgment without hindsight

Within a reasonable time after accepting a trusteeship or receiving trust assets, a trustee reviews the assets and makes and implements decisions on their retention and disposition, to bring the portfolio into compliance with the trust's purposes, terms and circumstances and with the act (R.C. 5809.04). Compliance is determined in light of the facts and circumstances existing at the time of the decision, not by hindsight (R.C. 5809.05); absent a breach of trust, a trustee is not liable for a loss or depreciation or for not having made a profit (R.C. 5810.03). Unless the terms provide otherwise, the act's duties do not require a trustee to monitor or diversify a life insurance policy held as a trust asset (R.C. 5809.031).

החוקים, מילה במילה

• Duty to act as prudent person

  R.C. 5808.04 ↗

  הסבר ברור ופשוט; נוסח החוק המילולי טרם אושר בספרייה שלנו. ראו את החוק הרשמי בקישור למעלה.

• Standard of care - portfolio strategy - risk and return objectives

  R.C. 5809.02 ↗

  הסבר ברור ופשוט; נוסח החוק המילולי טרם אושר בספרייה שלנו. ראו את החוק הרשמי בקישור למעלה.

• Investment authority - diversification

  R.C. 5809.03 ↗

  הסבר ברור ופשוט; נוסח החוק המילולי טרם אושר בספרייה שלנו. ראו את החוק הרשמי בקישור למעלה.

• Duties at inception of trusteeship

  R.C. 5809.04 ↗

  הסבר ברור ופשוט; נוסח החוק המילולי טרם אושר בספרייה שלנו. ראו את החוק הרשמי בקישור למעלה.

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