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The Prudent Investor Rule generally provides that a fiduciary shall invest and manage property held in a trust as a prudent investor would, by considering the purposes, terms, and other circumstances of the trust and by pursuing an overall investment strategy reasonably suited to the trust. A person who holds property for the benefit of another is said to hold that property in trust and is known as a fiduciary. The terms prudent and discretion and intelligence were first applied to trustee decisions in an 1830 Massachusetts court case, in which the court first established a “Prudent Man Rule” by determining that trustees must take their investment cues from “men of prudence, discretion and intelligence.”

State statutes setting forth prudent investor rules have varied in ...

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