Which types of investments are considered appropriate under the “prudent man” rule?
Kansas has adopted the Uniform Prudent Investor Act. See Kan. Stat. Ann. Ch. 58, Article 24A.
Kansas law does not specify the types of investments considered “appropriate” or “inappropriate.” A fiduciary may invest in any kind of property or type of investment that is consistent
with the rules set forth in the Kansas Uniform Prudent Investor Act. See Kan. Stat. Ann. § 58-24a02(e). Compliance with the prudent investor rule is determined
in light of the facts and circumstances existing at the time of the fiduciary's decision
or action and not by hindsight. See Kan. Stat. Ann. § 58-24a08.
Under State law, are parent payees permitted to invest the funds belonging to their
minor children differently than other types of payees?
Kansas law is silent on this issue. We assume the Kansas Uniform Prudent Investor
Act would apply to this situation.
What are the rules followed by trustees regarding the investment of funds with which
they are entrusted?
Fiduciaries shall exercise reasonable care, skill, and caution. Their investment and
management decisions respecting individual assets must not be evaluated in isolation,
but in the context of the portfolio as a whole and as part of an overall investment
strategy having risk and return objectives reasonably suited to the trust. See Kan. Stat. Ann. § 58-24a02(a) and (b).
A fiduciary shall consider the following when investing and managing trust assets:
(1) general economic conditions; (2) possible effect of inflation or deflation; (3)
expected tax consequences of investment decisions or strategies; (4) role that each
investment or course of action plays within the overall trust portfolio; (5) expected
total return from income and the appreciation of capital; (6) other resources of the
beneficiaries who are eligible to receive discretionary payments of trust income or
principal assets; (7) needs for liquidity, regularity of income, and preservation
or appreciation of capital; and (8) an asset's special relationship or special value.
See Kan. Stat. Ann. § 58-24a02(c)(1-8)
Fiduciaries shall make reasonable efforts to verify facts relevant to the investment
and management of trust assets. See Kan. Stat. Ann. § 58-24a02(d).
Fiduciaries with special skills or expertise have a duty to use those special skills
or expertise. See Kan. Stat. Ann. § 58-24a02(f).
Within a reasonable time after entering into a fiduciary relationship or receiving
trust assets, a fiduciary shall review the trust assets and make and implement decisions
concerning the retention
and disposition of assets, in order to bring the trust portfolio into compliance with
the terms of the trust and the requirements of the Uniform Prudent Investor Act. See Kan. Stat. Ann. § 58-24a04.
Fiduciaries have a duty of loyalty to beneficiaries and shall invest and manage the
trust assets solely in the interest of the beneficiaries. See Kan. Stat. Ann. § 58-24a05.
Fiduciaries shall act impartially in investing and managing trust assets, taking into
account any differing interests of the beneficiaries. See Kan. Stat. Ann. § 58-24a06.
Fiduciaries shall diversify the investments unless the fiduciary reasonably determines
that, because of special circumstances, the purposes of the trust are better served
without diversifying. See Kan. Stat. Ann. § 58-24a03.
A fiduciary may delegate investment and management functions that a prudent fiduciary
of comparable skills could properly delegate under the circumstances. See Kan. Stat. Ann. § 58-24a09.