Also known as:trust investment · trusts investments
Written by attorneys · grounded in primary & secondary sources — see below
Investments of trust property that satisfy the statutory or common-law standard of prudence, taking into account probable income and safety of capital.
Sources & Authorities
How it applies
Common Examples
2
Personal Representative Retains Decedent Assets
Omar serves as personal representative of Lena's estate that includes her interests in a law firm and litigation funding notes. Although these holdings would not qualify as proper trust investments, Omar retains them for over a year while awaiting case outcomes that will determine their value. The statute permits this retention because Omar acts reasonably for the benefit of the beneficiaries despite the assets' risk and his own personal interest in the firm.
Trustee Weighs Income and Safety
Nadine serves as trustee of Percy's inter vivos trust holding a concentrated portfolio of technology stocks and derivatives. She reviews performance reports and risk assessments before directing diversification trades that balance expected income against capital preservation. Her actions satisfy the standard because they reflect the judgment of a prudent person managing permanent funds for both return and safety.
Put it into practice
Test Yourself
10
Practice Questions5
· 1 primary source
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Course Outlines
Baker v. Weedon262 So. 2d 641
Common questions
Frequently Asked
4
Does the prudent investor standard apply to a personal representative who retains estate assets?+
No. A personal representative may retain assets owned by the decedent pending distribution or liquidation even when those assets would be improper for trust investment. The statute grants this authority provided the representative acts reasonably for the benefit of interested persons.
Supporting sources
May a personal representative retain assets in which the representative holds a personal interest?+
Yes. The governing statute expressly permits retention of assets in which the representative is personally interested so long as the representative acts reasonably for the benefit of interested persons and no will or court order restricts the power.
Supporting sources
What liability follows if a personal representative improperly exercises investment authority over estate assets?+
The representative is liable for resulting losses to the same extent as a trustee. The measure of damages matches the standard applied when a trustee breaches duties of prudence or loyalty.
Supporting sources
Does a beneficiary's demand for immediate liquidation override a personal representative's retention authority?+
No. The statute does not require unanimous beneficiary consent or immediate sale. Retention remains proper if the representative's decision is reasonable under the circumstances and serves the overall interests of the beneficiaries.
Supporting sources
Trusts and Estates Decedents EstatesWills · Powers and duties of personal representativeUBEFoundational