Prudent Investors 1996

APPENDIX A - DRAFT LEGISLATION

UNIFORM TRUSTEE INVESTMENT ACT, 199

The Trustee Act is amended by repealing section(s) and substituting the following:

Investment of trust property

01. (1) A trustee may invest trust property in any form of property or security in which a prudent investor might invest.

(2) Subsection (1) does not authorize a trustee to invest in a manner that is inconsistent with the terms of the trust.

[(3) A trustee [may][must] consider the following criteria in planning the investment of trust property, in addition to any others that are relevant to the circumstances:

(a) general economic conditions;

(b) the possible effect of inflation or deflation;

(c) the expected tax consequences of investment decisions or strategies;

(d) the role that each investment or course of action plays within the overall trust portfolio, [which may include financial assets, interests in closely held enterprises, tangible and intangible personal property, and real property;]

(e) the expected total return from income and the appreciation of capital;

(f) other resources of the beneficiaries;

(g) needs for liquidity, regularity of income, and preservation or appreciation of capital; and

(h) an asset's special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries

(i) ....]

Standard of Care

02. In investing trust property, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.

Diversification

03. A trustee must diversify the investment of trust property to an extent that is appropriate to

(a) the requirements of the trust, and

(b) general economic and investment market conditions.

Trustee not liable if overall investment strategy prudent

04. A trustee is not liable for a loss to the trust arising from the investment of trust property if the conduct of the trustee that led to the loss conformed to a plan or strategy for the investment of the trust property, comprising reasonable assessments of risk and return, that a prudent investor could adopt under comparable circumstances.

Quantification of trustee's liability when investment strategy imprudent

05. If the trustee fails to invest according to section 02 and a loss to the trust results, the trustee is liable only for the difference obtained when gains resulting from the conduct amounting to a breach of section 02 are subtracted from the losses resulting from that conduct.

Investment advice

06. (1) A trustee may obtain advice in relation to the investment of trust property.

(2) It is not a breach of trust for a trustee to rely upon advice obtained under subsection (1) if a prudent investor would rely upon the advice under comparable circumstances.

Delegation of authority with respect to investment

07. (1) In this section, "agent" includes a stockbroker, investment dealer, or investment manager.

(2) A trustee may delegate to an agent the degree of authority with respect to the investment of trust property that a prudent investor might delegate in accordance with ordinary business practice.

(3) A trustee who delegates authority under subsection (2) must exercise prudence in

(a) selecting the agent,

(b) establishing the terms of the authority delegated, and

(c) monitoring the performance of the agent to ensure compliance with the terms of the delegation.

(4) This section does not authorize a trustee to delegate authority under circumstances in which the terms of the trust require the trustee to act personally.

Next Annual Meeting

2017 Conference

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Regina, SK

August 13 - 17, 2017
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