The Uniform Prudent Investor Act reverses common law rules that restrict the investment powers of trustees. The new act requires a trustee to invest as a prudent investor would, using reasonable care, skill and caution in light of the objectives and risk tolerance of the individual trust. Diversification of assets is an obligation.
Trustees can delegate investment responsibilities to experts.
Within the scope of these powers and duties, trustees can choose to invest in any kind of asset that meets the objective of the specific trust. Trusts are likely to achieve a better return for beneficiaries than is the case under the common law rules. Trustees can protect the trust corpus better through diversification of assets than is the case under the common law rules. Trustees can invest to counter the effects of inflation, something that the common rules do not allow. A trustee no longer is forced to relay upon his or her own knowledge and expertise, but can acquire investment services to enhance his or her own knowledge and skill.