Substitute Senate Bill No. 1315
         Substitute Senate Bill No. 1315

              PUBLIC ACT NO. 97-140


AN  ACT CONCERNING THE CONNECTICUT UNIFORM PRUDENT
INVESTOR ACT.


    Be it enacted  by  the  Senate  and  House  of
Representatives in General Assembly convened:
    Section 1. (NEW)  Sections 1 to 13, inclusive,
of this act  may  be  cited  as  the  "Connecticut
Uniform Prudent Investor Act".
    Sec.  2.  (NEW)  (a)  Except  as  provided  in
subsection (b) of  this  section,  a  trustee  who
invests and manages  trust  assets  owes a duty to
the beneficiaries of  the trust to comply with the
prudent investor rule,  as set forth in sections 1
to 13, inclusive, of this act.
    (b) The prudent  investor  rule  is  a default
rule that may  be expanded, restricted, eliminated
or otherwise altered by provisions of the trust. A
trustee is not  liable  to  a  beneficiary  to the
extent  that  the   trustee  acted  in  reasonable
reliance on provisions of the trust.
    Sec. 3. (NEW)  (a)  A trustee shall invest and
manage trust assets  as  a prudent investor would,
by considering the  purposes,  terms, distribution
requirements and other circumstances of the trust.
In satisfying this  standard,  the  trustee  shall
exercise reasonable care, skill and caution.
    (b)  A  trustee's  investment  and  management
decisions respecting individual  assets  shall  be
evaluated not in  isolation, but in the context of
the trust portfolio as a whole and as a part of an
overall investment strategy having risk and return
objectives reasonably suited to the trust.
    (c) Among circumstances  that  a trustee shall
consider in investing  and  managing  trust assets
are such of  the  following as are relevant to the
trust or its  beneficiaries:  (1) General economic
conditions; (2) the  possible  effect of inflation
or deflation; (3) the expected tax consequences of
investment      decisions,     strategies      and
distributions; (4) 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;  (5)  the  expected  total  return  from
income  and  the   appreciation  of  capital;  (6)
related trusts and  other  income and resources of
the beneficiaries; (7)  needs  for  liquidity, for
regularity  of  income  and  for  preservation  or
appreciation of capital;  (8)  an  asset's special
relationship or special  value,  if  any,  to  the
purposes of the  trust  or  to  one or more of the
beneficiaries; (9) the  size of the portfolio; and
(10) the nature  and  estimated  duration  of  the
trust.
    (d) A trustee  shall  take reasonable steps to
verify  facts  relevant   to  the  investment  and
management of trust assets.
    (e) Subject to  the  standard of sections 1 to
13, inclusive, of  this  act, a trustee may invest
in any kind of property or type of investment.
    (f)  A  trustee  who  has  special  skills  or
expertise, or is  named  trustee  in reliance upon
the trustee's representation  that the trustee has
special skills or  expertise,  has  a  duty to use
those special skills or expertise.
    Sec. 4. (NEW)  A  trustee  shall diversify the
investments  of  the   trust  unless  the  trustee
reasonably  determines that,  because  of  special
circumstances,  the  purposes  of  the  trust  are
better served without diversifying.
    Sec. 5. (NEW)  Within  a reasonable time after
accepting a trusteeship or receiving trust assets,
a trustee 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 purposes,
terms,   distribution   requirements   and   other
circumstances  of  the   trust,   and   with   the
requirements of sections  1  to  13, inclusive, of
this act.
    Sec.  6. (NEW)  A  trustee  shall  invest  and
manage the trust  assets solely in the interest of
the beneficiaries.
    Sec. 7. (NEW)  If  a  trust  has  two  or more
beneficiaries, the trustee  shall  act impartially
in investing and managing the trust assets, taking
into  account  any   differing  interests  of  the
beneficiaries.
    Sec. 8. (NEW)  In investing and managing trust
assets, a trustee  may  only  incur costs that are
appropriate  and reasonable  in  relation  to  the
assets, the purposes  of  the trust and the skills
of the trustee.
    Sec.  9.  (NEW)   The  prudent  investor  rule
expresses  a standard  of  conduct,  not  outcome.
Compliance  with  the  prudent  investor  rule  is
determined in light of the facts and circumstances
existing at the  time  of  a trustee's decision or
action.
    Sec. 10. (NEW)  (a)  A  trustee  may  delegate
investment and management functions that a prudent
trustee  of  comparable   skills   could  properly
delegate  under  the  circumstances.  The  trustee
shall exercise reasonable  care, skill and caution
in: (1) Selecting  an  agent; (2) establishing the
scope and terms of the delegation, consistent with
the purposes and  terms  of  the  trust;  and  (3)
periodically  reviewing  the  agent's  actions  in
order  to  monitor  the  agent's  performance  and
compliance  with  the   scope  and  terms  of  the
delegation.
    (b) In performing  a  delegated  function,  an
agent owes a  duty to the trustee and to the trust
to exercise reasonable  care  to  comply  with the
scope and terms  of the delegation and to exercise
the delegated function with reasonable care, skill
and caution. An attempted exoneration of the agent
from liability for  failure to meet such a duty is
contrary to public policy and void.
    (c)   A  trustee   who   complies   with   the
requirements of subsection  (a) of this section is
not liable to  the  beneficiaries  or to the trust
for the decisions  or actions of the agent to whom
the function was delegated.
    (d) By accepting  the  delegation  of  a trust
function from the  trustee  of  a  trust  that  is
subject to the law of this state, an agent submits
to the jurisdiction  of  the  courts of this state
and can be held liable by the courts of this state
for  any  breach   of  duty  arising  out  of  the
delegation agreement or the terms of sections 1 to
13, inclusive, of this act.
    Sec.  11.  (NEW)   The   following   terms  or
comparable language in  a trust instrument, unless
otherwise limited or  modified  by the instrument,
authorizes any investment  or  strategy  permitted
under sections 1  to  13,  inclusive, of this act:
"Investments permissible by  law for investment of
trust  funds",  "legal  investments",  "authorized
investments", "using the  judgment  and care under
the circumstances then  prevailing that persons of
prudence, discretion, and intelligence exercise in
the management of their own affairs, not in regard
to speculation but  in  regard  to  the  permanent
disposition  of  their   funds,   considering  the
probable income as  well as the probable safety of
their  capital",  "prudent   man  rule",  "prudent
trustee rule", "prudent person rule", and "prudent
investor rule".
    Sec. 12. (NEW) Sections 1 to 13, inclusive, of
this  act  shall   be  applied  and  construed  to
effectuate their general  purpose  to make uniform
the  law with  respect  to  the  subject  of  said
sections among the states enacting them.
    Sec. 13. (NEW)  This  act  applies  to  trusts
existing on and  created  after the effective date
of this act.  As applied to trusts existing on the
effective date of  this act, this act governs only
decisions or actions occurring after that date.
    Sec.  14.  Section   45a-532  of  the  general
statutes  is  repealed   and   the   following  is
substituted in lieu thereof:
    In  the  administration   of   the  powers  to
appropriate  appreciation,  to   make  and  retain
investments and to  delegate investment management
of institutional funds,  members  of  a  governing
board shall exercise  [ordinary  business care and
prudence  under  the   facts   and   circumstances
prevailing at the  time of the action or decision.
In so doing  they  shall  consider  long and short
term needs of  the institution in carrying out its
educational,   religious,  charitable   or   other
eleemosynary purposes, its present and anticipated
financial requirements, expected  total  return on
its investments, price  level  trends  and general
economic   conditions]  CARE   AND   PRUDENCE   IN
ACCORDANCE WITH THE  STANDARDS  ESTABLISHED BY THE
CONNECTICUT UNIFORM PRUDENT INVESTOR ACT, SECTIONS
1 TO 13, INCLUSIVE, OF THIS ACT.

Approved June 13, 1997