In 1994, the National Conference of Commissioners on Uniform State Laws developed the Uniform Prudent Investors Act (UPIA).

The Act offers trustees the flexibility to choose from a wider array of investments while outlining factors every trustee must consider before making investment choices.  

The Uniform Law Commissions Summary of the Act states that the “adoption of this act by the state legislatures will correct the rules, based on false and damaging premises, that now govern the actions of trustees.”  The Summary further states that the “UPIA does not encourage irresponsible, speculative behavior, but requires careful assessment of investment goals, careful analysis of risk versus return, and diversification of assets to protect them.”

The Texas Legislature enacted a Texas version of the Uniform Prudent Investor Act which became effective on January 1, 2004.  The Texas Bar Comment from the Real Estate, Probate, and Trust Law Section of the State Bar of Texas says that “The adoption of the prudent investor rule reflects a significant departure from prior Texas law. The prudent investor rule is the majority rule among the states, so its adoption brings Texas in line with the national trend.”

Over the years, the Prudent Investor Rule has had several variations; however, the one constant is the Act’s protection of the beneficiaries.  Therefore, it is always important to keep abreast of not only the statutory changes but also the case law as it relates to this area.

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Lori Ashmore Peters
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Helping Dallas, Park Cities, Highland Park Texas Area Families with Estate Planning, Probate & Litigation
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