ARTICLE: Does the Prudent Investor Need the Uniform Prudent Investor Act -- An Empirical Study of Trust Investment Practices * Skip over navigation
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Copyright (c) 1999 University of Maine School of Law
Maine Law Review

ARTICLE: Does the Prudent Investor Need the Uniform Prudent Investor Act -- An Empirical Study of Trust Investment Practices *



* Copyright (c) 1998 by Martin D. Begleiter. All rights reserved.

1999

51 Me. L. Rev. 27

Author

Martin D. Begleiter **

Excerpt

I. INTRODUCTION

The "prudent man" or "prudent person" rule governing trust investments is one of the oldest rules in American trust law. 1 Despite undergoing modifications over the years, 2 the fundamentals of the rule did not greatly change from its first expression in 1830 3 until 1990. Since 1990, however, trust investment law has undergone a revolution. Major criticisms of the prudent man rule in the late 1980s 4 led to the formulation and adoption of the Restatement (Third) of Trusts: Prudent Investor Rule in 1990. 5 In 1994, the Uniform Law Commissioners promulgated the Uniform Prudent Investor Act (UPIA) 6 for adoption by the states. Already a number of states have adopted the Act. 7 The significance of the change is symbolized by the change from "prudent man" or "prudent person" to "prudent investor." 8 The reformers advocated the use of the lessons of modern financial theory in formulating trust portfolios. 9 Many aspects of the law developed under the prudent man rule are radically changed under the prudent investor formulation. 10 Commentary is beginning to speculate on changes to investment and tax planning under the new rule and what difficulties trustees will face under the prudent investor formulation. 11

One major impetus for the change from prudent man to prudent investor was a survey of trustee investment practices which formed the core of an extremely influential book in 1986. 12 In that book, Bevis Longstreth, a ...
 
 
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