4-10-902. Standard of care; portfolio strategy; risk and return objectives.

(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:

(i) General economic conditions;

(ii) The possible effect of inflation or deflation;

(iii) The expected tax consequences of investment decisions or strategies;

(iv) 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;

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

(vi) Other resources of the beneficiaries;

(vii) Needs for liquidity, regularity of income and preservation or appreciation of capital; and

(viii) An asset's special relationship or special value, if any, to the purposes of the trust or to one (1) or more of the beneficiaries.

(d) A trustee shall make a reasonable effort to verify facts relevant to the investment and management of trust assets.

(e) A trustee may invest in any kind of property or type of investment consistent with the standards of this article.

(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.

(g) Notwithstanding the foregoing provisions of this section, a trustee who discloses the application of this subsection and the limitation of the trustee's duties it provides either in the trust instrument or in a separate writing delivered to each insured at the inception of a life insurance contract or thereafter, if the disclosure is prior to an event giving rise to a claim thereunder, may acquire or retain a life insurance contract upon the life of the settlor or the settlor's spouse, or both, without liability for a loss arising from the trustee's failure to perform any of the following duties, unless the trust instrument states or limits otherwise:

(i) Determine whether the contract is or remains a proper investment;

(ii) Investigate the financial strength or changes in the financial strength of the life insurance company;

(iii) Make a determination of whether to exercise any policy option available under the contract;

(iv) Make a determination of whether to diversify the contracts relative to one another or to other assets, if any, administered by the trustee; or

(v) Inquire about changes in the health or financial condition of the insured or insureds relative to a contract.