Text: SF00025 Text: SF00027 Text: SF00000 - SF00099 Text: SF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 633.123, subsection 1, Code 1999, is 1 2 amended to read as follows: 1 3 1. INVESTMENTS BY FIDUCIARIES. When investing, 1 4 reinvesting, purchasing, acquiring, exchanging, selling, and 1 5 managing property for the benefit of another, a fiduciary 1 6 shall exercise pursuant to chapter 636A the care, skill, 1 7 prudence, and diligence under the circumstances then 1 8 prevailing that a prudent person acting in a like capacity and 1 9 familiar with such matters would use to attain the purposes of 1 10 the account.This standard requires that when making1 11investment decisions, a fiduciary shall consider the role that1 12the investment plays within the account's portfolio of assets1 13and may consider the general economic conditions, the1 14anticipated tax consequences of the investment, the1 15anticipated duration of the account, and the needs of all1 16beneficiaries of the account.1 17The propriety of an investment decision is to be determined1 18by what the fiduciary knew or should have known at the time of1 19the decision about the inherent nature and expected1 20performance of the investment, the attributes of the account1 21portfolio, the general economy, and the needs and objectives1 22of the beneficiaries of the account as they existed at the1 23time of the investment decision.1 24 Sec. 2. Section 634A.2, subsection 6, Code 1999, is 1 25 amended to read as follows: 1 26 6. A supplemental needs trust is not subject to 1 27 administration in the Iowa district court sitting in probate. 1 28 A trustee of a supplemental needs trust has all powers and 1 29 shall be subject to all the duties and liabilities of a 1 30 trustee as provided in the probate code and in chapter 636A, 1 31 except the duty of reporting to or obtaining approval of the 1 32 court. 1 33 Sec. 3. Section 636.23, unnumbered paragraph 1, Code 1999, 1 34 is amended to read as follows: 1 35 All proposed investments of trust funds by fiduciaries 2 1 shall first be reported to the court or a judge for approval 2 2 and be approved and unless otherwise authorized or directed by 2 3 the court under authority of which the fiduciary acts, or by 2 4 the will, trust agreement, or other document which is the 2 5 source of authority, a trustee, executor, administrator, or 2 6 guardian shall invest pursuant to chapter 636A all moneys 2 7 received by such fiduciary, to beby the fiduciaryinvested,2 8in securities which at the time of the purchase thereof are2 9included in one or more of the following classes:. 2 10 Sec. 4. Section 636.23, subsections 1 through 16, Code 2 11 1999, are amended by striking the subsections. 2 12 Sec. 5. Section 636.24, Code 1999, is amended to read as 2 13 follows: 2 14 636.24POPULATION ANDINDEBTEDNESS. 2 15The population specified in section 636.23 shall be2 16determined by the last preceding official federal census.The 2 17 indebtedness of any municipality or governmental subdivision 2 18 shall be determined by the official certificate of the officer 2 19 of such municipality or district in charge of its public 2 20 accounts. 2 21 Sec. 6. Section 636.25, Code 1999, is amended to read as 2 22 follows: 2 23 636.25 EXISTING INVESTMENTS. 2 24 Any fiduciary not governed by the probate code may by and 2 25 with the consent of the court having jurisdiction over such 2 26 fiduciary or under permission of the instrument creating the 2 27 trust, continue to hold any investment originally received by 2 28 the fiduciary under the trust or any increase thereof. Such 2 29 fiduciary may also make investments which the fiduciary may 2 30 deem necessary to protect and safeguard investments already 2 31 made according to the provisions ofthis and sections 636.232 32and 636.24chapter 636A. 2 33 Sec. 7. Section 636.60, Code 1999, is amended to read as 2 34 follows: 2 35 636.60 POWERS AND DUTIES OF TRUSTEES NOT SUBJECT TO COURT 3 1 ADMINISTRATION. 3 2 Trustees of trusts not being administered in the probate 3 3 court,shall have all the powers and shall be subject to all 3 4 the duties and liabilities as provided in the probate code, 3 5 except the duty of reporting to or obtaining approval of the 3 6 court, and shall be authorized to make investments pursuant to 3 7 chapter 636A. 3 8 Sec. 8. NEW SECTION. 636A.1 TITLE. 3 9 This chapter may be cited as the "Iowa Uniform Prudent 3 10 Investor Act". 3 11 Sec. 9. NEW SECTION. 636A.2 PRUDENT INVESTOR RULE. 3 12 1. Except as otherwise provided in this section, a trustee 3 13 who invests and manages trust assets owes a duty to the 3 14 beneficiaries of the trust to comply with the prudent investor 3 15 rule as set forth in this chapter. 3 16 2. The prudent investor rule may be expanded, restricted, 3 17 eliminated, or otherwise altered by the provisions of a trust. 3 18 A trustee is not liable to a beneficiary to the extent that 3 19 the trustee acted in reasonable reliance on the provisions of 3 20 the trust. 3 21 Sec. 10. NEW SECTION. 636A.3 STANDARD OF CARE – 3 22 PORTFOLIO STRATEGY – RISK AND RETURN OBJECTIVES. 3 23 1. A trustee shall invest and manage trust assets as a 3 24 prudent investor would, by considering the purposes, terms, 3 25 distribution requirements, and other circumstances of the 3 26 trust. In satisfying this standard, the trustee shall 3 27 exercise reasonable care, skill, and caution. 3 28 2. A trustee's investment and management decisions 3 29 respecting individual assets must be evaluated not in 3 30 isolation but in the context of the trust portfolio as a whole 3 31 and as a part of an overall investment strategy having risk 3 32 and return objectives reasonably suited to the trust. 3 33 3. A trustee shall consider the following circumstances, 3 34 to the extent they are relevant to the trust or its 3 35 beneficiaries, in investing and managing trust assets: 4 1 a. General economic conditions. 4 2 b. The possible effect of inflation or deflation. 4 3 c. The expected tax consequences of investment decisions 4 4 or strategies. 4 5 d. The role that each investment or course of action plays 4 6 within the overall trust portfolio, which may include 4 7 financial assets, interests in closely held enterprises, 4 8 tangible and intangible personal property, and real property. 4 9 e. The expected total return from income and the 4 10 appreciation of capital. 4 11 f. Other resources of the beneficiaries. 4 12 g. The trust's needs for liquidity, regularity of income, 4 13 and preservation or appreciation of capital. 4 14 h. An asset's special relationship or special value, if 4 15 any, to the purposes of the trust or to one or more of the 4 16 beneficiaries. 4 17 4. A trustee shall make a reasonable effort to verify 4 18 facts relevant to the investment and management of trust 4 19 assets. 4 20 5. A trustee may invest in any kind of property or type of 4 21 investment consistent with the standards of this chapter. 4 22 6. A trustee who has special skills or expertise, or is 4 23 named trustee in reliance upon the trustee's representation 4 24 that the trustee has special skills or expertise, has a duty 4 25 to use those special skills or expertise. 4 26 Sec. 11. NEW SECTION. 636A.4 DIVERSIFICATION. 4 27 A trustee shall diversify the investments of the trust 4 28 unless the trustee reasonably determines that, because of 4 29 special circumstances, the purposes of the trust are better 4 30 served without diversifying. 4 31 Sec. 12. NEW SECTION. 636A.5 DUTIES AT INCEPTION OF 4 32 TRUSTEESHIP. 4 33 Within a reasonable time after accepting a trusteeship or 4 34 receiving trust assets, a trustee shall review the trust 4 35 assets and make and implement decisions concerning the 5 1 retention and disposition of assets, in order to bring the 5 2 trust portfolio into compliance with the purposes, terms, 5 3 distribution requirements, and other circumstances of the 5 4 trust, and with the requirements of this chapter. 5 5 Sec. 13. NEW SECTION. 636A.6 LOYALTY. 5 6 A trustee shall invest and manage the trust assets solely 5 7 in the interest of the beneficiaries. 5 8 Sec. 14. NEW SECTION. 636A.7 IMPARTIALITY. 5 9 If a trust has two or more beneficiaries, the trustee shall 5 10 act impartially in investing and managing the trust assets, 5 11 taking into account any differing interests of the 5 12 beneficiaries. 5 13 Sec. 15. NEW SECTION. 636A.8 INVESTMENT COSTS. 5 14 In investing and managing trust assets, a trustee shall 5 15 only incur costs that are appropriate and reasonable in 5 16 relation to the assets, the purposes of the trust, and the 5 17 skills of the trustee. 5 18 Sec. 16. NEW SECTION. 636A.9 REVIEWING COMPLIANCE. 5 19 Compliance with the prudent investor rule is determined in 5 20 light of the facts and circumstances existing at the time of a 5 21 trustee's decision or action and not by hindsight. 5 22 Sec. 17. NEW SECTION. 636A.10 DELEGATION OF INVESTMENT 5 23 AND MANAGEMENT FUNCTIONS. 5 24 1. A trustee may delegate investment and management 5 25 functions that a prudent trustee of comparable skills would 5 26 properly delegate under the circumstances. The trustee shall 5 27 exercise reasonable care, skill, and caution in the following: 5 28 a. Selecting an agent. 5 29 b. Establishing the scope and terms of the delegation, 5 30 consistent with the purposes and terms of the trust. 5 31 c. Periodically reviewing the agent's actions in order to 5 32 monitor the agent's performance and compliance with the terms 5 33 of the delegation. 5 34 2. In performing a delegated function, an agent owes a 5 35 duty to the trust to exercise reasonable care to comply with 6 1 the terms of the delegation. 6 2 3. A trustee who complies with the requirements of 6 3 subsection 1 is not liable to the beneficiaries or to the 6 4 trust for the decisions or actions of the agent to whom the 6 5 function was delegated. 6 6 4. An agent who accepts the delegation of a trust function 6 7 from the trustee of a trust that is subject to the laws of 6 8 this state submits to the jurisdiction of the courts of this 6 9 state. 6 10 Sec. 18. NEW SECTION. 636A.11 TRUST LANGUAGE INVOKING 6 11 STANDARD OF THIS CHAPTER. 6 12 The following terms or comparable language in the 6 13 provisions of a trust, unless otherwise limited or modified, 6 14 authorize any investment or strategy permitted under this 6 15 chapter: 6 16 1. Investments permissible by law for investment of trust 6 17 funds. 6 18 2. Legal investments. 6 19 3. Authorized investments. 6 20 4. Using the judgment and care under the circumstances 6 21 then prevailing that persons of prudence, discretion, and 6 22 intelligence exercise in the management of their own affairs, 6 23 not in regard to speculation but in regard to the permanent 6 24 disposition of their funds, considering the probable income as 6 25 well as the probable safety of their capital. 6 26 5. The prudent man, trustee, person, or investor rule. 6 27 Sec. 19. NEW SECTION. 636A.12 APPLICATION TO EXISTING 6 28 TRUSTS. 6 29 This chapter applies to trusts existing on or created after 6 30 July 1, 1999. As applied to trusts existing on July 1, 1999, 6 31 this chapter governs only decisions or actions occurring after 6 32 that date. 6 33 Sec. 20. NEW SECTION. 636A.13 UNIFORMITY OF APPLICATION 6 34 AND CONSTRUCTION. 6 35 This chapter shall be applied and construed to effectuate 7 1 its general purpose to make uniform the law with respect to 7 2 the subject of this chapter among the states enacting the 7 3 uniform prudent investor Act. 7 4 EXPLANATION 7 5 This bill adopts the Uniform Prudent Investor Act approved 7 6 and recommended by the national conference of commissioners on 7 7 uniform state laws by establishing the Iowa Uniform Prudent 7 8 Investor Act. 7 9 The uniform Act provides that a trustee shall invest and 7 10 manage trust assets based on a prudent investor standard. The 7 11 bill directs the trustee to view investments based on the 7 12 total portfolio, and not on individual investments. The bill 7 13 provides for a trustee's standard of care, portfolio strategy, 7 14 risk and return objectives, and duties of diversification, 7 15 loyalty, and impartiality. The bill permits a trustee to 7 16 delegate investment and management functions. The bill 7 17 provides that the uniform Act applies to trusts created after 7 18 July 1, 1999, and to actions on previously existing trusts 7 19 after that date. 7 20 The bill eliminates the list of authorized securities a 7 21 fiduciary is allowed to invest in under Code section 636.23 7 22 and provides that a fiduciary can invest pursuant to the 7 23 prudent investor rule as provided by the uniform Act. This 7 24 change permits investments pursuant to the prudent investor 7 25 rule for trusts subject to the probate code, memorial 7 26 buildings and monument commissions, levee and drainage 7 27 districts, and cemetery funds as provided in Code chapter 566. 7 28 LSB 1077SS 78 7 29 ec/sc/14.1
Text: SF00025 Text: SF00027 Text: SF00000 - SF00099 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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